Post Conference Report
R
E-SHAPING
I
NDI
A
featuring
CEO Track
14 CEO presentations
4 Thematic presentations
and
Company Connect
Takeaways from company
interactions

6th Annual Global Investor Conference
Index
CEO TRACK
Company/CEO
Bharti Enterprises
Vedanta
ONGC
Wipro
GSK Pharma
Future Group
HDFC
Unitech
HDFC Bank
L&T-IDPL
Page
Mr Akhil Gupta,
Dy Group CEO & MD
3
Mr Navin Agarwal,
Vice Chairman
Mr R S Sharma,
Chairman & MD
Mr Girish Paranjpe,
Jt CEO
4
5
6
Information Technology
Financial Technologies .................................................................
Infosys Technologies ..................................................................
Tata Consultancy Services ..........................................................
Wipro .........................................................................................
Infrastructure
C&C Constructions .....................................................................
Era Infra Engineering ..................................................................
GMR Infrastructure ....................................................................
Hindustan Construction ..............................................................
MBL Infrastructure .....................................................................
Nagarjuna Construction ..............................................................
Simplex Infrastructure ................................................................
48
49
50
51
52
53
54
55
56
57
58
Dr Hasit Joshipura,
MD-India & V - S.Asia 7
Mr Kishore Biyani,
CEO
8
Mr Keki Mistry,
Vice Chairman & CEO
9
Mr Sanjay Chandra,
MD
Mr Aditya Puri,
MD
Mr K Venkatesh,
CEO
10
11
12
13
14
15
ICICI Bank
Ms Chanda Kochhar,
MD and CEO
Zee Entertainment
Mr Punit Goenka,
MD & CEO
Jindal Steel & Power
Mr Sushil Maroo,
Director
Media
DB Corp ...................................................................................... 59
Network 18 Media and Investments ............................................ 60
Zee Entertainment ...................................................................... 61
Metals
Hindalco .....................................................................................
Jindal Steel and Power ................................................................
JSW Steel ...................................................................................
Sterlite Industries .......................................................................
Tata Steel ...................................................................................
Oil & Gas
BPCL ...........................................................................................
Cairn India ..................................................................................
HPCL ..........................................................................................
Indian Oil Corporation .................................................................
ONGC .........................................................................................
Oil India ......................................................................................
Reliance Industries .....................................................................
Pharmaceuticals
Biocon ........................................................................................
Dr Reddy’s Laboratories ..............................................................
Glenmark Pharmaceuticals ..........................................................
Lupin ..........................................................................................
Opto Circuits ..............................................................................
Sun Pharmaceuticals ...................................................................
Real Estate
Anant Raj Industries ...................................................................
DLF ............................................................................................
DB Realty ...................................................................................
Godrej Properties .......................................................................
Mahindra Lifespaces ...................................................................
Unitech .......................................................................................
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
Thematic presentations
Politics & Development
Mr Nitin Gadkari,
President, Bhartiya Janata Party
16
17
18
19
Rural India
Mr Pradeep Kashyap,
CEO, MART
Health Of Corporate India
Ms Roopa Kudva,
Managing Director & CEO, CRISIL
Central Challenges of India
Mr Ramachandra Guha,
Eminent Historian and Writer
Company Connect: Conference Takeaways
Sector/Company
Page
Automobiles
Ashok Leyland ............................................................................ 21
Bajaj Auto .................................................................................. 22
Mahindra & Mahindra .................................................................. 23
Banking, Finance & Insurance
Axis Bank ...................................................................................
Bank of India ..............................................................................
Dewan Housing Finance ..............................................................
HDFC ..........................................................................................
HDFC Bank .................................................................................
ICICI Bank ..................................................................................
ING Vysya Bank ..........................................................................
Kotak Mahindra Bank ..................................................................
Punjab National Bank ..................................................................
Rural Electrification Corporation .................................................
Shriram Transport Finance ..........................................................
State Bank of India .....................................................................
Union Bank of India ....................................................................
Yes Bank .....................................................................................
Engineering
BHEL ...........................................................................................
KEC International .......................................................................
Larsen & Toubro .........................................................................
Voltas .........................................................................................
FMCG
Asian Paints ................................................................................
Dabur India ................................................................................
Ghari Industries ..........................................................................
Hindustan Unilever .....................................................................
Marico ........................................................................................
Radico Khaitan ............................................................................
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
Retailing
Pantaloon Retail ......................................................................... 86
Shoppers' Stop ........................................................................... 87
Telecom
Idea Cellular ............................................................................... 88
Reliance Communications ............................................................ 89
Tulip Telecom .............................................................................. 90
Textiles
Vardhman Textiles ....................................................................... 91
Utilities
CESC ..........................................................................................
GVK Power and Infrastructure ....................................................
JSW Energy ................................................................................
Nuclear Power Corporation .........................................................
Reliance Infrastructure ...............................................................
Reliance Power ...........................................................................
92
93
94
95
96
97
Others
Havells India ............................................................................... 98
Jain Irrigation ............................................................................. 99
Sintex Industries ...................................................................... 100

6th Annual Global Investor Conference
Conference Highlights
T
HE INDIAN ECONOMY has shown strong resilience during the global slowdown, and
is now in its exciting journey of growth of >8%. The stock markets have responded
very positively, and FII flows in CY10 YTD have already crossed US$10b.
Aggregate 1QFY11 performance of leading Indian companies seems to be broadly in-line.
The Indian corporate sector seems on track to achieve 25% earnings CAGR over FY10-12.
It was in this opportune backdrop that we at Motilal Oswal held our 6th Annual Global
Investor Conference over August 2-4, 2010 at the Grand Hyatt in Mumbai.
Our Global Investor Conference in 2009 was arguably the biggest ever Investor Conference
in India by any brokerage house. This year was bigger by another 40%. About 110 leading
Indian companies across sectors participated this year, compared to 80 in 2009. In all, the
3-day Investor Conference facilitated over 3,200 company-investor interactions, compared
to 2,300 in 2009.
The unique features which mark Motilal Oswal Annual Global Investor Conferences were
retained and enhanced.
CEO Track:
During the first two days of the conference, 14 CEOs of some of India's
biggest and fastest growing companies shared their vision, their strategies and their
success stories.
Four thematic presentations:
There were four thematic presentations by eminent
personalities on a diverse range of themes:
1. Mr Nitin Gadkari, National President of BJP spoke on pragmatic politics
2. Mr Pradeep Kashyap, founder of MART, made a compelling case for the Rural
India opportunity
3. Ms Roopa Kudva, MD & CEO, CRISIL, reassured us on the health of Corporate
India and
4. Mr Ramachandra Guha, eminent historian and writer, traced the history of
independent India and articulated three central challenges currently facing the
country.
Two luncheon panel discussions:
On each of the first two days was a panel
discussion over lunch. On day one, the topic was "India's Next Trillion Dollar Opportunity:
The Size Catalyst", and on day two, "The Indian Consumer Wallet: Evolving, Exploding
… Exciting". The panelists were leading CEOs from various sectors.
And last but not the least was a unique session on "The India Story:
Past,
Present and Future" by India's best storyteller, Mr Javed Akhtar, and a special show by
star Bollywood actor, Mr Boman Irani.
We believe the conference lived up to its theme of "Re-shaping India", leaving investors
with several interesting insights, winning themes, greater conviction, and the best investment
ideas.
We will be organizing our 7th Annual Global Investors Conference in 2011 as well, only
bigger, bolder and better. We look forward to your participation in that event.
Navin Agarwal
CEO - Institutional Equities
Rajat Rajgarhia
Director - Research
August 2010
1

6th Annual Global Investor Conference
CEO Track
Company/Keynote* presentations
Company/CEO
Bharti Enterprises
Vedanta
ONGC
Wipro
GSK Pharma
Future Group
HDFC
Unitech
HDFC Bank
L&T-IDPL
ICICI Bank
Zee Entertainment
Jindal Steel&Power
Mr Akhil Gupta,
Dy Group CEO & MD
Mr Navin Agarwal,
Vice Chairman
Mr R S Sharma,
Chairman & MD
Mr Girish Paranjpe,
Jt CEO
Dr Hasit Joshipura,
MD-India & V - S.Asia
Mr Kishore Biyani,
CEO
Mr Keki Mistry,
Vice Chairman & CEO
Mr Sanjay Chandra,
MD
Mr Aditya Puri,
MD
Mr K Venkatesh,
CEO
Ms Chanda Kochhar,
MD and CEO
Mr Punit Goenka,
MD & CEO
Mr Sushil Maroo,
Director
Thematic presentations
Politics & Development
Mr Nitin Gadkari,
President, Bhartiya Janata Party
Rural India
Mr Pradeep Kashyap,
CEO, MART
Health Of Corporate India
Ms Roopa Kudva,
Managing Director & CEO, CRISIL
Central Challenges of India
Mr Ramachandra Guha,
Eminent Historian and Writer
August 2010
2

6th Annual Global Investor Conference
Bharti Airtel
Mr Akhil Gupta
Dy Group CEO & MD,
Bharti Enterprises
Director, Bharti Airtel
Mr Akhil Gupta
is the Deputy
Group CEO & Managing Director of
Bharti Enterprises and a Director of
Bharti Airtel. He has been closely
involved from the very beginning in
the growth of Bharti in the
telecommunication services sector.
He has led the formation of various
partnerships for Bharti with leading
international operators like British
Telecom, Singapore Telecom and
most recently Vodafone in addition
to induction of financial investors like
Warburg Pincus, Asia Infrastructure
Fund and New York Life.
Mr Gupta has also been responsible
for conceptualizing and implementing
the separation of passive mobile
infrastructure and forming Indus
Towers a Joint Venture with Vodafone
and Idea, which has become a
largest tower company in the world.
With innovative thought leadership,
he has been able to guide Airtel in
becoming perhaps the lowest cost
producer of minutes worldwide and
ensuring that it provides very high
ROE despite the lowest tariffs in the
world.
A Chartered Accountant by
qualification, Mr Gupta also oversees
the investor relations and corporate
governance at Airtel. He has been
representing the Indian Telecom
Industry and Bharti regularly at
various forums and important
seminars in India and abroad.
CEO Track
Key Takeaways
Core essence:
The Indian Telecom sector is set to enter the second revolution, driven
by broadband and value-added services along with voice.
Industry insights
Apparent measures like wireless penetration (~50%), population coverage (~84%),
and affordability (tariffs at UScent1/min) underscore the success of the Indian
Telecom sector.
Real measures of success for the industry are: (a) challenging and transforming the
traditional mindset about the Telecom business by maintaining profitable growth
despite low ARPU, high MOU, and high pre-paid subscriber base, (b) outsourcing
network operations and IT, and (c) sharing infrastructure with competitors (e.g.
Bharti, Vodafone and Idea pooling their infrastructure under JV, Indus Towers).
Universal Service Obligation fund (~US$4.5b) can be productively used for rural 3G
rollouts.
Mobile banking and m-commerce are the only practical means for financial inclusion
and an attractive business opportunity for the Telecom sector.
Indian wireless sector has seen two major rounds of competition in 2003 and 2009.
In terms of competitive intensity, the worst seems to be over.
Company vision and strategy
Bharti is confident of implementing its “minutes factory” model in other emerging
markets.
3G is unlikely to be priced very affordably, given the high payouts made for 3G
spectrum.
Leading companies like Bharti are emerging stronger from the recent tariff wars.
Bharti is set become an Indian MNC – from operations in 1 circle (Delhi) in 1996 to
15 countries in 2010.
It is unlikely to participate in potential industry consolidation.
Key triggers/milestones/challenges
National Policy for Telecom and Related Infrastructure treating Telecom at par with
essential services
Growth in broadband market post 3G rollouts
Rationalization of taxes and license fees
Resolution of equipment-related security issues
RBI regulations on m-banking and m-commerce awaited
3
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
August 2010

6th Annual Global Investor Conference
Vedanta Group
Mr Navin Agarwal
Vice Chairman
Vedanta
CEO Track
Mr Navin Agarwal
is Deputy
Executive Chairman, Vedanta
Resources. He is responsible for the
group’s business strategy as well as
for
overseeing
its
overall
performance and growth. He chairs
the group’s Executive Committee.
Vedanta Resources, the first Indian
manufacturing company to be listed
on the London Stock Exchange, is a
diversified metals and mining
company, with revenues in excess
of US$6 billion. Mr Agarwal directs
the planning, execution, and
completion of the group’s strategic
organic growth projects. He is also
responsible for inorganic growth,
strategic treasury and fund raising
initiatives, global investor relations,
and talent management.
Mr Agarwal is the Executive Vice
Chairman of Sterlite Industries, and
the Chairman of Koncola Copper
Mines (KCM) and Malco. He is Director
in several companies - Balco,
Hindustan Zinc, Vedanta Aluminum,
Sterlite Infrastructure, Sterlite
Energy, Finsider International
Company.
Mr Agarwal has completed the
Owner/President Management
Program at Harvard University and
has a Bachelor of Commerce from
Sydenham College, Mumbai.
Key Takeaways
Core essence:
Vedanta Group companies will be top-5 producers of iron ore, aluminum,
and zinc-lead-silver. Sesa Goa is targeting 50mtpa of iron ore production by FY13.
Industry insights
Domestic metal demand is likely to grow 8-10%, driven by GDP and infrastructure
growth.
Metal consumption in India has significant potential to grow.
Over the next five years, aluminum per capita consumption in India is likely to grow
at 9.6% CAGR, the fastest in the world, to 1.7kg by 2014. Even then, India’s per
capita consumption will be much lower than the global average of 7.3kg.
Copper per capita consumption in India is likely to increase at 8% CAGR, again the
fastest in world, to 0.7kg by 2014. It will still be much lower than the global average
of 3.1kg.
Demand for power is likely to grow at a CAGR of 10% over FY10-15 v/s CAGR of
7.1% in the last five years. Supply of power, on the other hand, is likely to increase
at 9.8% over FY10-15 v/s CAGR of 6.6% over the last five years.
Company vision and strategy
Sesa Goa’s iron ore production is likely to grow to 50m tons by FY13.
Post expansion at Rampur Agucha and acquisition of Anglo’s assets, Vedanta has
become the world’s largest producer of zinc and lead, with a total capacity of
~1.5mtpa.
Silver production will grow 3x to 16m ounces by FY13.
Aluminum capacity will grow 5x to 2.5mtpa by FY13, while cost of production is
likely to be US$1,000-1,100/ton (in the lowest quartile).
Commercial power generation will grow 10x to 5,500MW by FY14.
Key triggers/milestones/challenges
Sterlite Energy’s first 600MW commercial power plant is in advanced stage of
commissioning. Other three units are likely to be commissioned by 1HFY12.
Clearance for Nyamgiri bauxite mines
Commissioning of 1,200MW CPP and 325ktpa smelter at Balco
Ramp-up of zinc, lead and silver production at Hindustan Zinc.
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Tushar Chaudhari
+91 22 3982 5425
Tushar.Chaudhari@MotilalOswal.com
August 2010
4

6th Annual Global Investor Conference
ONGC
Mr R S Sharma
Chairman & MD
ONGC
Mr R S Sharma
is Chairman and
Managing Director, ONGC since May
2006. He is also the Chairman of
ONGC Videsh, Mangalore Refineries
and Petrochemicals, and other
ONGC group of companies.
Mr Sharma has varied experience in
Project Management, Finance and
Corporate Affairs. He joined ONGC
Board as Director (Finance) in March
2002. Before joining the ONGC
Board, he was appointed as Director
(Finance) of ONGC Videsh Limited -
a wholly owned subsidiary of ONGC
in January 2002, a position he
concurrently held till November 2002.
Mr Sharma, a Fellow Member of the
Institute of Cost & Works
Accountants of India and an
Associate Member of the Indian
Institute
of
Bankers,
has
participated in various management
programs in India and overseas.
CEO Track
Key Takeaways
Core essence:
India will account for 15% of incremental global demand, but has only
0.5% of global hydrocarbon reserves.
Industry insights
Demand destruction has led OPEC to cut its crude supplies by 4.2mmbbl/d and its
spare capacity is at higher levels of 6-7mmbbl.
Production from non-OPEC fields has declined 6.5% during the period 2000-08.
New discoveries are smaller in size and also in more difficult deepwater areas,
resulting in greater challenges in terms of technology and investments.
Shale gas revolution in the US has resulted in dramatic change in global gas markets
– glut in LNG markets and softer gas prices.
BP spill in Gulf of Mexico will have a huge negative impact on the industry’s offshore
activities.
India’s oil import dependence is already high at 77% and will move up constantly.
Company vision and strategy
As against a decline in non-OPEC fields, ONGC’s production has remained relatively
stable due to its investments in IOR/EOR activities (additional production of 8mmt
since 2001).
Since FY01, ONGC has already invested Rs365b on IOR/EOR and redevelopment
projects, and is currently undertaking projects worth Rs237b.
ONGC’s RRR (reserve to replacement ratio) has been above one for the last six
years; reserve accretion at 83mmtoe (3P) in FY10 has been the highest in two
decades.
Key triggers/milestones/challenges
Subsidy sharing:
In 1QFY11, upstream shared 1/3rd of total under-recoveries, of
which ONGC shared 80%. The company expects the government to rationalize
subsidy sharing.
Development of East-coast discoveries:
ONGC will adopt hub development for
its East-coast discoveries (G-4-6, GS-29-1, G-4-5, KG-DWN-98/2, IB) in three phases.
Production is likely to commence in 2012-13, with likely production of >30mmscmd.
Daman offshore development:
Post fast track development of B-12 and C-24
fields in this area, production is likely to reach 10-15mmscmd.
Production outlook:
Crude oil production is likely to increase from 24.9mmt to
28mmt in FY13. Gas production will increase from 63mmscmd in FY10 to >72mmscmd
in FY13 and >100mmscmd in FY16.
5
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Bivek Anand
+91 22 3982 5426
Bivek.Anand@MotilalOswal.com
Milind Bafna
+91 22 3982 5445
Milind.Bafna@MotilalOswal.com
August 2010

6th Annual Global Investor Conference
Wipro
Mr Girish Paranjpe,
Jt CEO
Wipro
Mr Girish S Paranjpe
is the Jt
Chief Executive Officer of Wipro's
IT Business and an Executive
Director on Wipro's Board. He jointly
carries the overall responsibility for
strategy and operations of Wipro's
IT Business. He took over this new
role effective April 2008. His direct
responsibilities include the following
Business Units - Financial Services,
Communication, Media, Telecom and
Technology.
Mr Paranjpe joined Wipro in 1990 and
has held a broad range of leadership
positions in critical portfolios across
the group. In his last role from 2000-
08, he was the President of Wipro
Technologies Financial Solutions
division, and a member of Wipro's
Corporate Executive Council. Under
his leadership, Financial Solutions
has clocked 45% CAGR over the
past five years, established valuable
customer relationships, and
significantly deepened domain
expertise.
Mr Parajpe has represented Wipro
and the IT Industry in various public
forums including the Prime Minister's
Task Force on Information
Technology, the NASSCOM and at
leading global business schools. He
is also on the International Advisory
Board of Credit Agricole, retail bank
leader in France and in Europe.
CEO Track
Key Takeaways
Core essence:
Wipro is aligned to the needs of the 21st century corporation.
Industry insights
The 21st century corporation is a lean organization which performs only core
operations, and outsources all non-core operations.
Such a 21st century corporation will need a transformation partner that will enable
business outcomes rather than merely offer services on hire.
Technology (both hardware and software) will lead innovation and change; technology
areas include [1] Cloud Computing, [2] Collaboration, [3] Green Technology, [4]
Social Computing, [5] Information Management, [6] Mobility, and [7] Security.
Company vision and strategy
Wipro is well positioned to emerge as the transformation partner of the 21st century
corporation by offering a 6-pronged solution: (1) Client Engagement Program, (2)
Domains and Solutions, (3) Technology Investments, (4) Full Stack and Cloud, (5)
Growth Engines, and (6) Operational Excellence.
Wipro has established capabilities and a broad portfolio across verticals, geographies
and service lines. It has a comprehensive IT Services portfolio in India and the
Middle East.
To tap the technology opportunity, Wipro plans to establish leadership in R&D – it
has 18,000 engineers, who design both hardware and software products.
Key triggers/milestones/challenges
The contribution of fixed price projects (FPP) has increased by 20% in three years
to 44% for Wipro. Higher proportion of FPP in the project mix necessitates efficient
management of manpower to ensure that delivery does not falter.
Wipro’s confidence about Europe emerges from three factors: (1) While government
finances are weak, private sector finances are reasonably strong. Wipro has hardly
any exposure to government projects; (2) Wipro has low exposure to the affected
areas, mainly countries in southern Europe, Greece, Spain, Italy, Portugal, etc; and
(3) Wipro also stated that the depreciation in the Euro has aided exports from
countries like France and Germany, thereby helping it win more business.
23% attrition levels are likely to result in margin pressures ahead, leading to RSU
charges, promotion impact (~20,000 people in the 3-7 year bracket).
Active engagements of contractors (for domains without a long-term career growth
path within the organization) could cushion the pressures on margins and reduce
delivery pressures.
6
Covering Analyst(s):
Ashwin Mehta
+91 22 3982 5409
Ashwin.Mehta@MotilalOswal.com
Ashish Chopra
+91 22 3982 5424
Ashish.Chopra@MotilalOswal.com
August 2010

6th Annual Global Investor Conference
GlaxoSmithKline Pharmaceuticals
Dr Hasit Joshipura
Managing Director - India
& VP - South Asia
GlaxoSmithKline Pharmaceuticals
CEO Track
Dr Hasit Joshipura
is a graduate
in Electrical Engineering from VJTI,
Mumbai University, and a Post
Graduate from Indian Institute of
Management, Ahmedabad. He has
completed his Doctorate program at
the School of Management at IIT
Mumbai.
After having spent about three years
with the Tata Administrative
Services, Dr Joshipura has spent
about 16 years with the Unilever
Group of companies in India and held
positions of increasing responsibility
in commercial, sales, marketing and
business management functions. In
October 2001, he joined the
pharmaceutical business of Johnson
& Johnson, as President & Executive
Director, a position he held until
August 2006.
In October 2006, he was appointed
Vice President, South Asia and
Managing Director India with
GlaxoSmithKline Pharmaceuticals
(GSK). He is also Chairman of the
boards of GSK Bangladesh and GSK
Sri Lanka.
Dr Joshipura is a member of the Board
of Governors of VJTI and is also on
the Board of Governors of the
Indian Institute of Management,
Ahmedabad.
Key Takeaways
Core essence:
The Indian pharmaceuticals industry represents a large opportunity
due to favorable demographics and improving healthcare infrastructure. GSK is well
positioned to capitalize on this opportunity.
Industry insights
The Indian pharmaceuticals market is likely to sustain 12-14% growth in the coming
years partially led by growing medical insurance coverage (growing at 38-40% and
still covers less than 5% of the population) and higher spending by the government
(currently 1% of GDP, targeted to go up to 2% of GDP).
Large growth can come from the segment, which is at bottom of the pyramid, with
appropriate product pricing.
Medical tourism will be another growth driver for Indian pharmaceuticals, due to
large differentials in cost of healthcare in developed markets and emerging markets
like India.
Company vision and strategy
Leveraging on the large pipeline of its parent, GSK Plc
Expanding presence in branded generics segment and pursuing in-licensing
opportunities
Gradual transitioning from acute to chronic therapies (lifestyle segments) and
sustaining dominant position in vaccines
Pursuing inorganic growth opportunities (brand acquisition) at reasonable valuations
– the company has Rs18.6b cash on hand as of 31 December 2009.
Profitability to be driven by operating leverage, improved productivity and critical
mass rather than increase in pricing
Key triggers/milestones/challenges
Sustained pace of new launches including patented products (like
Eltrombopag
in
CY10)
Ramp-up in
Rotarix
and
Cervarix
sales over the next 2-3 years
Ramp-up in sales of patented products to 10-15% of turnover by 2015
Covering Analyst(s):
Nimish Desai
+91 22 3982 5406
NimishDesai@MotilalOswal.com
Amit Shah
+ 91 22 3982 5423
Amit.Shah@MotilalOswal.com
August 2010
7

6th Annual Global Investor Conference
Future Group
Mr Kishore Biyani
Founder & CEO
Future Group
CEO Track
Mr Kishore Biyani
is the Group CEO
of Future Group and Managing
Director of Pantaloon Retail. He has
led the emergence of Pantaloon
Retail as the leading retailer in the
country. While retail continues to
form the core business of Future
Group, Mr Biyani has led the group's
foray into allied businesses spanning
the consumption space. Future
Group's other businesses include
financial services, insurance, brand
development and logistics.
Led by its flagship enterprise,
Pantaloon Retail, the group operates
around 15 million square feet of retail
space in over 71 cities and towns
and 65 rural locations across India.
The group's retail arm follows a multi-
format retail strategy and some of
its leading formats include, Big
Bazaar, Central, Food Bazaar,
Pantaloons, Ezone, Home Town and
Planet Sports. It also operates
popular
shopping
portal,
futurebazaar.com and rural retail
chain, Aadhar.
A staunch believer in the group's
corporate credo, 'Rewrite Rules,
Retain Values,' Mr Biyani considers
Indianness as the core value driving
the group. He recently authored the
book, 'It
Happened In India.'
Key Takeaways
Mr Kishore Biyani made a joint presentation with Mythologist and Chief Belief Officer of
Future Group, Mr Devdutt Pattnaik. It was a rather unconventional presentation covering
how the Future Group is applying principles of mythology to its everyday business.
Core essence:
Belief + Behavior = Business
Industry insights
Modern retail is operating in a different environment in India. Unlike the West,
modern retail is propelling higher spending by consumers.
Opening up of FDI (foreign direct investment) to retail is good for well-established
players like Pantaloon, as it will help them address their funding requirements.
However, if there are too many foreign players, it may end up as lose-lose for all.
Company vision and strategy
Leading retailers like Wal-Mart and Tesco are 2-3% of their respective country's
GDP. There is a similar possibility in India, and Pantaloon is eyeing such a position
as and when it arises.
The Future Group is re-designing its business structures, systems and strategies
along certain mythological principles and value systems. For instance, the value
system of "Customer is God; Retailing is Religion; and the Store is the Temple" is
being imbibed across Pantaloon. Likewise, the store manager is "coronated" as
"Karta", the Sanskrit term for overall caretaker of all store constituents including
customers, employees, suppliers, etc.
Focus on specific product categories (mainly Food, Fashion and Home) has resulted
in the group doing well in the retail business. The company's balance sheet is now
strong and cash flows from operations will exceed incremental investments in the
coming 12-15 months.
Key triggers/milestones/challenges
The key challenge for any business is recruiting and retaining professionals whose
beliefs and behaviors are aligned with that of the organization.
The Future Group is actively engaged in identifying "Duryodhans" within the
organization so that the overall business remains on track.
THE BELIEF-BEHAVIOR ALIGNMENT MATRIX
Yes
Beliefs
(unseen)
Aligned?
No
Krishna
Ravan
No
Ram
Duryodhan
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Nikhil Kumar
+91 22 3029 5120
Nikhil.N@MotilalOswal.com
Aligned? Yes
Behavior (seen)
August 2010
8

6th Annual Global Investor Conference
HDFC
Mr Keki Mistry
Vice Chairman & CEO
HDFC
CEO Track
Mr Keki Mistry
is the Vice
Chairman & CEO of Housing
Development Finance Corporation
(HDFC).
Mr Mistry began his career with The
Indian Hotels. He joined HDFC in
1981. He was inducted on to the
Board of Directors of HDFC as an
Execustive Director in 1993 and was
elevated to the post of Managing
Director with effect from November
2000. In October 2007, Mr Mistry
was appointed as Vice Chairman &
Managing Director, and in January
2010, he was elevated to his current
position.
Mr Mistry obtained a Bachelors
Degree in Commerce from the
Bombay University. A qualified
Chartered Accountant and a Fellow
Member of the Institute of
Chartered Accountants of India, Mr
Mistry is also a member of the
Michigan Association of Certified
Public Accountants, USA.
Mr Mistry is a Director on the Board
of several Indian companies apart
from HDFC.
Key Takeaways
Core essence:
HDFC’s Housing Finance business is likely to grow at a CAGR of 20-25%
over the next few years, with RoE improving at least 100bp every year. Subsidiaries will
now contribute significantly to growth.
Industry insights
HDFC remains optimistic about demand for housing finance. India’s mortgage to
GDP ratio is just 7% as compared to 80%+ in developed countries like UK and USA.
Key growth drivers for housing are: (1) increased affordability, mainly due to increased
disposable income – average house value has fallen from 22x annual income in
1995 to 4.7x in 2010, (2) rising urbanization – 28% in 2010; expected to increase to
40% by 2030, and (3) favorable demographics – average age of home buyers is 35,
and currently, ~60% of the Indian population is below the age of 30 years.
Government statistics place current housing shortage in India at 25m units.
Company vision and strategy
HDFC maintains a standard of income based lending, thereby cancelling out exposure
to volatility in real estate prices.
On AUM basis, the company will continue to keep individual loans to corporate loans
ratio at 70:30. Owned branches and affiliates will continue to be a dominant source
for loan growth (currently contributing 92%).
Introduction of base rate will not have a significant impact on the borrowing cost for
HDFC, as it has the flexibility to borrow incremental money by issuing bonds and
debentures that even banks can subscribe below the base rate.
The company plans to sustain its cost/income ratio at ~8%, going forward.
HDFC intends to grow RoE by ~100bp every year. It plans to achieve breakeven in its
life insurance business in FY11, and expects to turn profitable by FY12.
Key triggers/milestones/challenges
Improving profitability from asset management and insurance businesses will be
key to long-term profitability.
Listing of insurance arm is an important trigger to unlock value.
Margins will sustain in the traditional range of 2.15-2.25%.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010
9

6th Annual Global Investor Conference
Unitech
Mr Sanjay Chandra,
Managing Director
Unitech
CEO Track
Mr Sanjay Chandra
joined Unitech
as Head of Sales & Marketing in 2002.
Subsequently, he was elevated to
the position of Managing Director.
He has been instrumental in creating
and launching several projects that
have set a new benchmark of quality,
size and performance in the Indian
real estate industry. Under his
leadership, Unitech has been
successful in raising capital in a very
challenging environment. He is also
the Chairman of Unitech Wireless,
the company’s wireless venture.
Prior to Unitech, Mr Chandra founded
Ikon Clothing Inc in 1996 in New York,
USA, where he was Founder
President up to 2001.
After his schooling from Modern
School, Vasant Vihar, New Delhi, Mr
Chandra did his further studies in
Business Management at University
of Massachusetts and Boston
University.
Key Takeaways
Core essence:
Unitech is now focusing on projects with quick monetization rather
than high margin.
Industry insights
Luxury/premium housing accounts for just 4-5% of the real estate market; mid-
income and affordable housing account for a much higher proportion.
There is unmet demand of ~24m houses, which provides companies with focus on
mid-income housing at correct price points a secular opportunity – 18-20% industry
growth appears likely for FY10 (growth could surprise also).
The commercial/retail vertical is unlikely to witness full recovery before two years.
Leasing volumes in SEZs have reduced. A lot will depend on the impact of DTA post
FY11.
Company vision and strategy
Focusing on volumes and cash flows to boost IRRs:
Rather than focusing on
margins, Unitech is focused on the mid-income/affordable housing vertical to achieve
volumes, increase cash flows and boost IRRs. This is a change from Unitech’s earlier
strategy to focus on luxury/premium housing.
Focus entirely on execution:
Unitech is focusing on execution to accelerate its
cash flows and achieve higher output capability. It currently has ~35msf of projects
under construction and hopes to achieve sales of 12-14msf in FY11. It is working on
standardizing its processes to reduce cost and time. The management is hopeful
that these steps would enable the company to achieve higher throughput.
Aggressive growth plans for UT Infra:
Unitech has aggressive growth plans to
expand in the infrastructure business through its 35% associate company, UT Infra.
Its prior experience in this field coupled with strong in-house order book from
residential sales in Unitech would allow UT Infra to achieve strong growth ahead.
Key triggers/milestones/challenges
Possible listing of de-merged entity, UT Infra.
Another key trigger would be successful acquisition of UCP and its integration with
Unitech Infra, as it would allow UT to benefit significantly from the ongoing recovery
in the commercial vertical.
Execution ramp up would be the key challenge for Unitech. As on FY10 Unitech had
~38msf of residential projects under construction, while it plans to sell ~12msf in
FY11. UT is slated to deliver ~22msf of projects over FY11-13.
Covering Analyst(s):
Siddharth Bothra
+91 22 3982 5407
SBothra@MotilalOswal.com
Sandipan Pal
+91 22 3982 5436
Sandipan.Pal@MotilalOswal.com
August 2010
10

6th Annual Global Investor Conference
HDFC Bank
Mr Aditya Puri,
Managing Director
HDFC Bank
CEO Track
Mr Aditya Puri
is the Managing
Director of HDFC Bank since its
inception in 1994. His vision was to
create a "World Class Indian Bank".
And, he did.
Mr Puri is credited with using
technology to change the way
banking is done in India. From the
range of products to their delivery
to sheer convenience of banking,
HDFC Bank has made significant
strides in the banking space. Prior to
HDFC Bank, Mr Puri was Chief
Executive of Citibank, Malaysia.
Currently, he is also Deputy
Chairman of the Indian Banks
Association.
Mr Puri is a commerce graduate from
Punjab University and a qualified
Chartered Accountant. He did his
schooling from Bishop's School,
Pune.
Mr Puri has received many awards in
his illustrious career, the most recent
ones being:
Businessman of the year 2009 -
Business India
Best Innovative Banker - Financial
Express India's Best Banks Awards
2009
Best CEO in India 2009 - Finance
Asia annual poll of Investors and
Analysts
Key Takeaways
Core essence:
Strong economic growth (8%+) will aid robust growth for financial
intermediaries (20%+). HDFC Bank expects to grow at least 5% higher than industry.
Industry insights
GDP growth would be 8-8.5% and higher growth in agriculture could further boost
growth. Fiscal deficit would continue to trend downwards in line with 5% guidance
given by the Finance Minister.
Inflationary pressure would continue (average inflation of 6-7%) and the bias for
interest rate would be upwards.
The Indian banking industry is well placed, given the low leverage, higher provisions
and strong asset-liability management.
Not concerned about RBI’s issuance of new licenses; enough competition exists.
HDFC Bank believes that the grant of new banking license would have a bias towards
rural areas, where there is enough opportunity for new banks to start.
Opening of branch licensing policy for foreign branches would not be meaningful as
the market share of foreign banks is relatively low.
Consolidation in the banking industry will not happen in the true sense till there is
consolidation in state-owned banks.
Deposit rate hikes will be aggressive, given the expected liquidity deficit in 2HFY11.
Indian corporates will rely more on domestic credit, as global liquidity is unlikely to
support borrowing plans.
Company vision and strategy
Customer segmentation, product diversification, effective utilization of technological
capabilities and immaculate execution are key success factors.
To grow faster than industry average and increase market share.
Retail loans and working capital demand would continue to drive loan growth.
However, corporate loan growth is likely to be higher than retail loan growth.
HDFC Bank will continue its focus on the domestic market; however, it would like to
participate in the international trade opportunity emerging from domestic corporates.
Key triggers/milestones/challenges
NIMs are likely to remain stable at 4.1-4.2% in FY11. Focus over the next 12 months
will be on improving productivity of CBoP branches.
Branch expansion will be limited. CASA ratio will see some decline as interest rates
rise; unlikely to sustain at ~50%.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010
11

6th Annual Global Investor Conference
Larsen & Toubro
Mr K Venkatesh,
CEO,
L&T-IDPL
CEO Track
Mr K Venkatesh
is the CEO of L&T
Infrastructure
Developmental
Projects Limited, L&T's Investment
and Development arm.
He has more than three decades of
experience in Project/Company
Finance and Accounts, Structuring,
Bidding, Project Management,
Financial Closure, Operations &
Maintenance of Infrastructure
Projects in sectors such as Roads &
Bridges, Seaports, Hydel Power,
Water Supply Projects, Information
Technology Parks, Retail Buildings,
Hospitality and Residential Projects.
A Chartered Accountant and a Cost
Accountant, Mr Venkatesh has also
obtained a Post-Graduate Diploma in
Business Management from XLRI,
Jamshedpur.
Key Takeaways
Core essence:
The Indian infrastructure space set to grow at an accelerated pace;
core project development skills will drive value creation for L&T-IDPL.
Industry insights
The Road sector is expected to revive after a brief lull. A large number of bids are
likely to open in the next three months. Initial thrust will be on 6-laning of roads.
Along with this, bids for mega-road projects are also expected to open. Work on
proposed expressways is unlikely to progress in the next two years.
There is scope for growth in Metro Rail and port segments.
In Power, apart from the Generation segment, the T&D segment too is likely to
create opportunities in terms of developmental projects. L&T-IDPL expects bids of
Rs500b-700b in the next 3-4 years.
However, the Indian Airport sector currently has limited opportunities for privatization,
except for the proposed Navi Mumbai project. The new Bengaluru airport will go
through expansion program in next three years.
Company vision and strategy
Around 25% of the company’s assets are operational, 25% will be so in the next
two years. This will be an important milestone for its proposed fund raising plans.
L&T-IDPL's turnover of Rs10b will accelerate over the next few years.
It has set an IRR benchmark and strictly follows it for project evaluation, even in
cases such as the extremely complex Hyderabad Metro project.
Future growth will be driven by the Transportation, Ports and Power sectors. The
company aims to have 30-40% exposure to Power and the remaining to Non-Power
assets. It aims to grow its asset base to over US$20b in the next few years.
The company is evaluating various fund raising options; it intends to raise funds in
the next one year.
It targets a BOT portfolio size of Rs800b-1,000b (Non-Power: Rs500b-600b; Power:
Rs300b-400b).
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Navneet Iyengar
+91 22 3982 5126
Navneet.Iyengar@MotilalOswal.com
Key triggers/milestones/challenges
Fund raising, listing
Success in large power projects, including UMPPs and mega road contracts
Dhamra port will be commissioned in the next three weeks.
Political uncertainty remains a key challenge.
Land availability is an issue with large projects, and any delay can impact returns.
August 2010
12

6th Annual Global Investor Conference
ICICI Bank
Ms Chanda Kochhar
Managing Director and CEO
ICICI Bank
CEO Track
Ms Chanda Kochhar
is the
Managing Director and Chief
Executive Officer of ICICI Bank. She
began her career with ICICI as a
Management Trainee in 1984. In
1993, when ICICI decided to enter
commercial banking, she was
deputed to ICICI Bank as a part of
the core team to set up the bank.
Since then, she has served the bank
under different roles.
Ms Kochhar, a qualified Cost
Accountant and an MBA, has won
several awards and accolades
including the 'Banker of the Year'
Award by Financial Express in July
2010.
Apart from being on the Board of
ICICI Bank and various group
companies, Ms Kochhar is a member
of the Prime Minister's Council on
Trade & Industry, US-India CEO
Forum, Executive Board of the
Indian
School
of
Business,
Hyderabad, Member of the Board of
Governors of Indian Council for
Research on International Economic
Relations (ICRIER), Member of the
Managing Committee of the Indian
Banks Association and also a member
of the Council of Scientific and
Industrial Research (CSIR) Society.
Key Takeaways
Core essence:
To resume growth strategy and continue to focus on 4C’s (increasing
CASA base, Cost reduction, Credit quality and Capital conservation). Improving RoE to
15% is a key focus area, with RoA improving to 1.4-1.5% by FY12.
Industry insights
GDP growth would remain robust at 9-10%.
Inflationary pressures still persist in the economy, with demand-side pressure
continuing. ICICI Bank expects inflation to decline to 7% by March 2011.
Although credit growth has picked up, the base (pick-up from different segments)
requires broadening.
While deposit rates have already started increasing, interest rates on the lending
side would move up gradually in 2HFY11.
With corporate activity picking up, current deposits flow would be lower. Hence,
advances growth would outpace deposits growth.
Company vision and strategy
Balance sheet growth is likely to be ~20%; CASA ratio is expected to remain at
current level (as of 1QFY11, core CASA ratio stood at 37%).
While there may not be absolute reduction in costs, going ahead, CI ratio would be
maintained at ~40% (and at ~1.6% as a percentage of average assets).
Credit quality is gradually improving, with net accretion to NPAs declining. Further,
1QFY11 saw reduction in restructured accounts from Rs53b to Rs37b. It is on course
to achieve 70% coverage ratio much before RBI’s deadline of March 2011.
Loan book growth for FY11 would be ~15%, within which the domestic book would
grow at 20% and international book in single-digit. In FY12-13, loans are likely to
grow 20-22%, again driven by domestic loans.
ICICI Bank awaits approval from RBI for completing the merger of Bank of Rajasthan.
It expects the merger to boost CASA base, enhance third-party product distribution
and support the branch-centric banking model.
The new IRDA guidelines augur well for the future of the life insurance industry and
would benefit policy holders. ICICI Bank’s focus would be to make the insurance
business more profitable by cutting costs and optimizing commission payments.
Key triggers/milestones/challenges
Managing quality growth is a key challenge.
There would be no immediate unlocking of value from the insurance business
considering the change in regulatory environment. Further, as the insurance business
has turned profitable, it does not need fresh capital to grow.
13
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010

6th Annual Global Investor Conference
Zee Entertainment Enterprises
Mr Punit Goenka
Managing Director & CEO
Zee Entertainment
CEO Track
Mr Punit Goenka
is the Chief
Executive
Officer
of
Zee
Entertainment Enterprises. He also
serves as a Director of other Essel
group companies such as: Essel
Infraprojects, Essel Telecom
Holdings, Rochan (India), Zee
Sports, Agrani Wireless Services,
Agrani Satellite Services, ASC Mobile
Communication, and Diligent Media
Corporation.
Mr Goenka started his career with
ZEE TV in 1995 as head of the Music
division. In 2004, he took charge as
the Business Head of Zee TV and
then as Chief Executive Officer in
July 2008. Under his leadership, Zee
TV has made rapid progress into a
leadership position among General
Entertainment Channels (GEC) in
India.
Mr Goenka has participated in
various intensive Management
Education Programs – Young
Managers Program at INSEAD,
France and a program on “Birthing
of Giants” hosted by Young
Entrepreneurs’ Organization and MIT
Enterprise Forum, Boston, USA.
Key Takeaways
Core essence:
Strength in numbers; Zee network is ideally placed with its diversified
channel portfolio.
Industry insights
Digitization will be a significant revenue driver, going forward. Trends indicate that
DTH subscriber base can increase to ~70m in the next four years v/s ~23m currently.
Share of television in advertising revenues is likely to continue increasing from the
current level of 40-42%.
Industry ad revenues are likely to grow at 14-15% in FY11.
Potential sunset clause on analog broadcasting would be a positive.
Sports business continues to be a loss making proposition for the industry. Turnaround
is likely only post digitization, when subscription revenue becomes a meaningful
contributor, as broadcasters will be able to charge a premium for sports properties.
Regional markets will continue to grow at a faster pace, given lower penetration of
broadcasting (v/s print) in these markets.
Company vision and strategy
Zee leads the industry in profitability metrics. It will maintain a disciplined investment
philosophy, with focus on returns and profitability.
It aims at maintaining its leadership and becoming a number-1 or number-2 player
across its operating genres, including regional channels.
The company is looking at genres like cookery, golf, and kids channels to further
enhance its addressable market.
Zee expects to maintain or grow EBITDA margin from FY10 level of ~28%. However,
it would be investing back more in content to consolidate its position.
It is agnostic to the platform and has more than 90,000 hours of digitized content,
which can be used for new media opportunities.
Key triggers/milestones/challenges
Lack of profitability in sports genre remains a challenge.
Regulatory developments mandating digitization could be a big trigger for industry.
Gearing up the content for new 10-12m households being added to C&S universe
every year.
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
August 2010
14

6th Annual Global Investor Conference
Jindal Steel and Power
Mr Sushil Maroo
Director
Jindal Steel and Power
CEO Track
Mr Sushil Maroo
is the Deputy
Managing Director of Jindal Power
and a Director on Jindal Steel &
Power's (JSPL) Board.
A chartered accountant by
profession, Mr Maroo has work
experience of over two decades in
the field of financial management,
accounts and corporate affairs. Ever
since he joined JSPL in 2001, he has
played a key role in shaping JSPL's
expansion, its financial planning and
strategic growth. Mr Maroo played
an important role in JSPL's
breakthrough US$2.1 billion project
in South America apart from
expansion of the company's India
business in Orissa and Jharkhand.
Under his leadership, Jindal Power
has set up India's first mega power
project, the 1,000MW OP Jindal
Super Thermal Power Plant in
Raigarh, Chhattisgarh.
Mr Maroo holds various positions with
national chambers of commerce,
including:
Member of ASSOCHAM's Expert
Committee on Power
Active member of the Expert
Committee on Iron & Steel since
2008-09
Member, Organizing Committee for
FICCI's "Indian Electricity 2009".
Key Takeaways
Core essence:
Over 10 years, power capacity will rise 8x to 11,480MW and steel
capacity will rise 6x to 18mtpa.
Industry insights
Merchant power rates are likely to be similar to the rates of Rs5-6/kwh that the
state electricity boards charge the user industry. On deducting wheeling charges
and transmission loss, commercial power plants should be able to extract realizations
of Rs4-5/kwh.
It will become difficult to set up thermal power plants in India due to worsening
demand-supply equation of coal and environmental issues.
Arunachal Pradesh has potential to set up 50,000MW of hydro power projects.
Steel is likely to be in shortage once again in 2011 in India.
Company vision and strategy
Jindal Steel & Power has planned its growth in mineral-rich states of Chhattisgarh,
Orissa and Jharkhand. It has coal resources of 2.6b tons and iron ore resources of
180m tons.
Its 3mtpa steel capacity in Chhattisgarh will be augmented by 6mtpa steel plant at
Angul Orissa, 6mtpa steel plant in Jharkhand and 3mtpa steel plant in Chhattisgarh.
Power capacity will rise to 5,380MW by FY15 and 11,480MW by FY20. Out of
11,480MW capacity target, 6,100MW capacity addition will be by hydro projects.
The company is contemplating more projects to keep the growth momentum.
Coal-to-liquid project is unique in India. Jindal Steel & Power is likely to invest
US$8b. It has been allotted the 1.5b-ton Ramchandani coal block in Orissa.
Key triggers/milestones/challenges
Captive power plant capacities of 1,350MW are likely to be commissioned in phases
during FY11 and FY12. Sale of surplus power from these projects will drive earnings.
Statutory clearances for Jindal Power’s 2,400MW thermal power project are likely
to be completed in the next 3-6 months.
Steel and pellet production is expected to ramp up. Steel production will rise from
2m tons in FY10 to 2.5m tons in FY11 and 3m tons in FY12.
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Tushar Chaudhari
+91 22 3982 5425
Tushar.Chaudhari@MotilalOswal.com
August 2010
15

6th Annual Global Investor Conference
Politics & Development
Mr Nitin Gadkari
Thematic
Presentation
President
Bhartiya Janata Party
Mr Nitin Gadkari
is President,
Bhartiya Janata Party. While
popularly known as a political figure,
Mr Gadkari is really a multi-faceted
personality - a young activist, an able
administrator,
a
entrepreneur, and
politician.
successful
an astute
Key Takeaways
Core essence:
Where there is political will, there is a way; where there is no will,
there is a survey!
On politics & development
Good politics is also good economics. According to Food Commissioner, NC Saxena’s
Committee Report (released in mid-2009), 50% of the Indian population earns less
than US$1 per day and almost 90% earns less than US$2 per day. Unless development
uplifts the lives of these people, it cannot be called real and sustainable development.
If more and more people are given education and jobs, they will turn consumers, in
turn leading to GDP growth and sustained growth in stock markets, as well.
Increasingly, there is a need for an integrated approach, including a strong public-
private partnership. The government should leave most of the business in private
hands, and step in only in those projects where returns are not adequate for
commercial activity.
On need for innovation
Innovation is the key solution to many problems of development. Example – toll fees
for the Bandra-Worli sea link can be securitized to fund the equity portion of extending
the sea link from Worli to Nariman Point. The expected toll on this can be further
securitized to fund the next project, and so on.
Similarly, in Mumbai, huge quantity of sewage water is released into the seas,
causing pollution. Instead, such sewage water can be treated and supplied to power
plants, conserving water resources and also protecting the environment.
Innovation can be applied anywhere e.g. people are more than willing to pay for a
helicopter service connecting religious places in difficult terrains such as Badrinath,
Kedarnath, Hrishikesh, etc.
On infrastructure as a key driver of development
Infrastructure projects such as power, roads (including rural roads), irrigation and
cold chains are critical to development, as they generate employment and also
deliver economic value.
In power, there should be high thrust on hydro and solar power. Instead, the present
government seems keen on nuclear power, where the cost of generation is unviable.
Irrigation needs to be moved from the state list to the concurrent list, so that central
funds can also come in and projects will not be stalled or reduced in scope for want
of resources.
Projects like interlinking of rivers need to be pursued vigorously for effective water
management at the national level.
16
Mr Gadkari began his political career
at the age of 19, when he joined the
Akhil Bhartiya Vidyarthi Parishad. He
shot to fame during his stint as Public
Works Minister of Maharashtra
(1995-99), thanks to the swift
completion of the Mumbai-Pune
Expressway and the network of 55
flyovers in Mumbai. He pioneered the
concept of Public-Private partnership
(PPP) in infrastructure development.
Mr Gadkari is also a successful
entrepreneur. Among his business
ventures are a co-operative
supermarket, a 2,500tpd sugar
factory, a 120,000-liter ethanol
plant, a 26MW power generation
unit, a bio-fertilizer unit, and a
solvent extraction soyabean plant.
Mr Gadkari is widely traveled, and a
firm believer in integral humanism and
social trusteeship.
Covering Analyst(s):
Dipankar Mitra
+91 22 3982 5405
Dipankar.Mitra@MotilalOswal.com
August 2010

6th Annual Global Investor Conference
Rural India
Mr Pradeep Kashyap
CEO
MART
Thematic
Presentation
Mr Pradeep Kashyap
is known as
the father of rural marketing in India.
He is recognized as a thought leader
and is a regular speaker at CEO
forums in India and abroad. He has
authored the most definitive 'Rural
Marketing Book' for students and
practitioners alike.
In 1993, Mr Kashyap started MART,
which has emerged as India's leading
rural consultancy organization. He
co-created Project Shakti with
Hindustan Unilever to appoint
46,000 poor women from micro
finance groups as company dealers.
He has pioneered another low cost,
last mile rural distribution model using
village volunteers on bicycles for
Colgate, Heinz and others.
Mr Kashyap been Marketing Advisor
to Ministry of Rural Development and
has served on Prime Minister Office
and Chief Minister Committees on
rural development. He is a World
Bank and United Nations consultant.
He is also President, Rural Marketing
Association of India.
Key Takeaways
Core essence:
By 2020, Rural India will be a US$1 trillion economy, larger than today’s
Canada or South Korea. This will throw up opportunities across businesses.
Insightful glimpses of Rural India
Rural India is the real bull’s eye of the Indian growth story.
Rural India accounts for 70% of population, 56% of income, 64% of expenditure
and 33% of India’s savings. Also, it accounts for 60% of FMCG sales, 50% of TV set
sales, and 40% of two-wheeler sales.
Despite urbanization, 65% of India’s population would continue to live in villages.
Proper roads now connect 80% of Rural India, which accounts for 90% of the rural
population and 95% of rural wealth. Tele-density has improved from 5% to 21% in
five years and is expected to go up to 50% by 2012. Almost all villages now have
electricity; 60% of rural households (70% of rural wealth) have electricity. At present,
70% of the rural population is literate; by 2020, there would be ~100% literacy.
There are ~87 million Kisan Credit Cards in rural India, which is larger than all the
debit and credit cards of Urban India.
At present, 45% in Rural India earn more than US$1/day – the figure is expected to
go up to 58% in 2020. In Rural India, the seemingly low income of US$2-3/day is
actually high, as there is no rent (most people own houses, however modest) and
education, health, etc is provided almost free by the Indian government. Thus, even
on lowly income levels, purchasing power in Rural India is high.
Key drivers of rural resurgence and their impact
8 good monsoons in last 10 years. Significant increase in minimum support price of
grain (100% increase in 10 years; input costs have increased only by 50%).
Through NREGS (National Rural Employment Guarantee Scheme), 44 million people
have been given employment; the program has also given regularity to rural income.
Multiplicity, i.e. multiple earnings streams for rural people has added to the income.
In terms of share of wallet, food constituted 58% of the consumption basket in
2000, which is down to 43% now and would go down to 33% by 2020, the same as
Urban India today. This suggests meaningful increase in discretionary spend.
Opportunity
Market Size (US$ b)
2010
2020
Gr. (%)
Covering Analyst(s):
Dipankar Mitra
+91 22 3982 5405
Dipankar.Mitra@MotilalOswal.com
Communication
Education
Transportation
Construction
3.3
24.0
44.4
28.9
8.9
56.0
80.0
40.0
170
128
80
38
August 2010
17

6th Annual Global Investor Conference
Health Of Corporate India
Ms Roopa Kudva
Thematic
Presentation
Managing Director & CEO
CRISIL, A Standard & Poor Company
Ms Roopa Kudva
is Managing
Director & Chief Executive Officer
of CRISIL, India's leading ratings,
research, risk and policy advisory
company and a subsidiary of
Standard & Poor's. She is also the
Region Head, South Asia, Standard
& Poor's, the foremost global
provider of financial market
intelligence.
Ms Kudva joined CRISIL in 1992. In
1998, she was seconded to
Standard & Poor's, Paris as Director,
Financial Institutions Ratings, and
covered emerging markets in the
Mediterranean and Middle East
region. She has also been a member
of several policy level committees
relating to the Indian financial system
including working groups of the
Reserve Bank of India.
Ms Kudva holds a degree in Statistics
and a postgraduate diploma in
management from Indian Institute of
Management, Ahmedabad. She has
been featured among most powerful
women in Indian business by
'Business Today' in 2007 and 2009.
Key Takeaways
Core essence:
Modified Credit Ratio (MCR, i.e. ratio of rating upgrades to downgrades)
is moving up after a gap of four years, suggesting upturn in credit quality cycle.
Economic backdrop
The Indian economy is on a high growth path. The credit cycle has turned up in
H2FY10. Credit quality as measured by the modified credit ratio (broadly the ratio of
upgrades to downgrades) has turned up sharply.
The longer-term economic backdrop is provided by: (1) 8% ‘business as usual’ rate
of growth, (2) prospect of economy tripling from US$1.4 trillion to US$4.2 trillion
over a decade (assuming 5% inflation rate and stable exchange rate), (3) favorable
demography with 67% population in the working age by 2020, and (4) emergence
of investment as a key growth driver.
CRSIL projections for FY11 are: GDP (8%), WPI inflation (8.5-9.0%), 10-yr G-sec
(8.3-8.5%), exchange rate (Rs43.5-44/US$), and fiscal deficit (5%).
Implications for Indian corporate sector
Firstly, MNCs are likely to gain higher market share through five growth avenues –
establishment of capabilities, joint ventures, acquisitions, customized products and
services, and leveraging Indian resources for global markets.
Secondly, the degree of competition is set to increase given (1) entry of new Indian
players, (2) increasing presence of global corporations, and (3) likely rise in imports,
given the appreciating rupee. This, in turn, should result in Indian companies scaling
up and diversifying their revenue sources, leading to steady rise in share of exports.
Thirdly, financial strength would become critical, requiring liquidity cushion in balance
sheets, limiting and controlling debt usage, regular access to equity markets and
creation of innovative corporate structures (eg, subsidiaries, SPVs, etc.).
Finally, capital flows into India are expected to remain strong, with FDI exceeding
FII flows in the near future. Savings rate would inch up towards 41% of GDP by
FY14 from about 37% currently.
CRISIL outlook on credit quality
Credit quality cycle is improving with MCR moving up after a gap of four years. The
rate of upgrades has surged in 2HFY10 and now exceeds the rate of downgrades,
which has halved over 1HFY10. Key industries upgraded include banks and financial
sector, construction, gems and jewelry, and auto ancillaries.
The strongest sectors in terms of demand outlook and financial strength are Auto,
Banking, Cement, FMCG, Oil & Gas and Pharma. The weakest sectors appear to be
Real Estate (Commercial), Chemicals and Leather.
Covering Analyst(s):
Dipankar Mitra
+91 22 3982 5405
Dipankar.Mitra@MotilalOswal.com
August 2010
18

6th Annual Global Investor Conference
Central Challenges of India
Thematic
Presentation
Mr Ramachandra Guha
Eminent Historian and Writer
Mr Ramachandra Guha
is a
Historian and Columnist based in
Bangalore. He obtained his doctorate
from the Indian Institute of
Management, Calcutta. Between
1985 and 1995 he held academic jobs
in India, Europe, and North America.
Since 1995 he has been a full-time
writer.
Mr Guha's first book was 'The Unquiet
Woods' published in 1989. Among Mr
Guha's
other
books
are
Environmentalism: A Global History
(2000), A Corner of a Foreign Field
(2002), a social history of Indian
cricket, and two books on Indian
ecological conflicts co-authored with
Madhav Gadgil: This Fissured Land
(1992) and Ecology and Equity
(1995). Mr Guha's most recent book
is India After Gandhi: The History of
the World's Largest Democracy,
published in 2007.
In January 2009, Mr Guha was
awarded the Padma Bhushan. In
2009 and 2010, India Today
nominated him as one of the fifty
most influential people in India.
Key Takeaways
Core essence:
“In India the choice could never be between chaos and stability, but
between manageable and unmanageable chaos, between humane and inhuman anarchy,
and between tolerable and intolerable disorder.” – quoting sociologist Ashis Nandy.
A historical perspective of India’s present
The two most remarkable things about India are: (1) It is an unnatural nation, and
(2) It is an unlikely democracy. It is an “unnatural nation” because everywhere else
in the world, the three key nation-building factors were: (1) Common language, (2)
Common religion, and (3) Common enemy. None of the three hold true for India.
India is an unlikely democracy, because again nowhere in the world did democracy
start with universal adult suffrage. In contrast, voting rights were granted in phases
in UK and 90 years after its independence, US engaged in its bloodiest civil war.
India has been plagued with a series of problems ever since Independence.
There were other enormous challenges: 8 million refuges had to be resettled and
500 princely states were to be integrated. This mammoth feat was accomplished
because India had a set of extraordinary leaders in Nehru, Patel and Ambedkar.
The major events that shaped India in subsequent decades include major conflicts
around linguistic states (1950s), Mizoram insurgency (1960s), Emergency (1970s),
insurgency in Punjab (1980s), religious riots and caste riots (1990s).
Central challenges of India’s development
Given this backdrop, India currently faces three central challenges (1) Discontent
at the borders, namely J&K, Nagaland and Manipur, (2) Discontent in the heart of
the country – one-third of India covering states of Orissa, Bihar, Jharkhand, Madhya
Pradesh, Chhattisgarh, Andhra Pradesh and Maharashtra are facing Maoist
insurgency. While Maoists deserve no sympathy it is undeniable that the tribals in
India are most discriminated against and gained the least from economic prosperity
(even less than the dalits). While economic liberalization has a benign face (e.g. IT
and service sector growth) it has a brutal face (where tribals are plagued with
displacement, dispossession and discontent), and (3) abuse of natural environment,
encompassing depletion of water table, rise in air pollution, choked rivers, etc.
The framework to address these challenges has three pillars (1) State, (2) Private
sector and (3) Civil society. In the years immediately after independence, the State
did a remarkable job. The private sector was in fact non-existent. However, in more
recent years, the private sector and civil society have done a reasonable job, whereas
the State has slipped into corruption and nepotism, including conversion of political
parties into family firms. The State has to perform once again for any meaningful
resolution of the central challenges facing modern India.
19
Covering Analyst(s):
Dipankar Mitra
+91 22 3982 5405
Dipankar.Mitra@MotilalOswal.com
August 2010

6th Annual Global Investor Conference
Company Connect
Anant Raj Industries
Ashok Leyland
Asian Paints
Axis Bank
Bajaj Auto
Bank of India
BHEL
Biocon
BPCL
C&C Constructions
Cairn India
CESC
Dabur India
DB Corp
DB Realty
Dewan Housing Finance
DLF
Dr Reddy’s Laboratories
Era Infra Engineering
Financial Technologies
Ghari Industries
Glenmark Pharmaceuticals
GMR Infrastructure
Godrej Properties
GVK Power and Infrastructure
Havells India
HDFC
HDFC Bank
Hindalco
Hindustan Construction
Hindustan Unilever
HPCL
ICICI Bank
Idea Cellular
Indian Oil Corporation
Infosys Technologies
ING Vysya Bank
Jain Irrigation
Jindal Steel and Power
JSW Energy
JSW Steel
KEC International
Kotak Mahindra Bank
Larsen & Toubro
Lupin
Mahindra & Mahindra
Mahindra Lifespaces
Marico
MBL Infrastructure
Nagarjuna Construction
Network 18 Media and Investments
Nuclear Power Corporation
Oil India
ONGC
Opto Circuits
Pantaloon Retail
Punjab National Bank
Radico Khaitan
Reliance Communications
Reliance Industries
Reliance Infrastructure
Reliance Power
Rural Electrification Corporation
Shoppers' Stop
Shriram Transport Finance
Simplex Infrastructure
Sintex Industries
State Bank of India
Sterlite Industries
Sun Pharmaceuticals
Tata Consultancy Services
Tata Steel
Tulip Telecom
Union Bank of India
Unitech
Vardhman Textiles
Voltas
Wipro
Yes Bank
Zee Entertainment
August 2010
20

Sector:
Automobiles
6th Annual Global Investor Conference
Ashok Leyland
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
AL IN
1,330.3
72
2.1
74 / 32
12 / 26 / 84
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/07A
3/08A
3/09A
3/10A
71,682
77,426
59,811
72,447
4,413
4,693
1,900
4,237
3.3
3.5
1.4
3.2
34.8
6.4
-59.5
123.0
21.8
20.6
50.8
22.8
5.1
4.5
2.8
2.6
23.8
22.3
5.8
11.4
20.7
15.6
5.7
10.0
1.3
1.2
1.9
1.5
13.6
11.5
24.0
14.4
Company Represented By:
Mr K Sridharan, CFO
Key Takeaways
Positive FY11 growth outlook, supply constraints hit production
It expects the CV industry to grow by 20% in FY11, with Ashok Leyland growing at
55-60% to 85,000-90,000 vehicles with a market share of 28%-30%.
The company plans to launch a U-truck tractor and tipper range in 2QFY11.
It is facing a shortage of key auto components like diesel fuel injection systems and
tyres. While a fuel pump shortage is expected to ease from October, it is importing
tyres (~20,000 tyres will be imported in FY11) from China to meet the shortfall.
The company is cautious about demand in 2HFY11 due to multiple headwinds in the
form of (a) higher fuel prices, (b) higher cost of ownership, (c) pre-buying in 2QFY11
due to migration to BS-III from October 2010, and (d) higher interest rates.
EBITDA margins to improve from 1QFY11 level
The management expects margins to improve from 10% in 1QFY11, driven by price
increases (~4% since April 2010), softening of raw material costs, higher operating
leverage and higher contribution from the Pantnagar plant.
Pantnagar's production ramp-up and increase in localization is expected to support
profitability over 2-3 years. It will drive savings of Rs35,000/unit in excise duty
(~Rs40,000/unit was guided earlier). It operates at 1,000 units/month, which is
expected to rise to 4,000 units/month by March 2011. The excise benefit at full
capacity would be Rs1.75b.
It hopes to pass on cost increase for BS-III compliance (~Rs40,000/vehice or 4.25%).
Other takeaways
Ashok Leyland's finance subsidiary started operations in 1QFY11 with the financing
of 972 trucks in 1QFY11. It aims to have disbursement of Rs5b in first year and to
have a presence in all states and 300 centers in three years.
The management has guided for FY11 tax rate of about the MAT rate, as it would
benefit from higher weighted deduction for R&D and increasing contribution from
the Pantnagar plant.
The strategic buyout of 26% stake for about US$7.5m in UK's Optare will give Ashok
Leyland access to more products including a modern range of low floor, mid-size
and full size buses and access to export markets.
Valuations and view
We expect strong demand for commercial vehicles to continue. Besides, excise benefits
from the Pantnagar plant, pre-buying due to BS-III norm implementation in India by
October 2010 and higher operating leverage will drive earnings growth in FY11. The
stock trades at 17.5x FY11E consensus EPS of Rs4 and at 13.8x FY12E consensus EPS of
Rs5.2.
Not Rated.
Covering Analyst(s):
Jinesh Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Sandeep Patil
+91 22 3982 5418
Sandeep.Patil@MotilalOswal.com
August 2010
21

Sector:
Automobiles
6th Annual Global Investor Conference
Bajaj Auto
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
BJAUT IN
144.7
2,724
8.5
2,767 / 1,045
7 / 50 / 92
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A
88,104
7,963
18,175
24,303
26,617
55.0
125.6
168.0
184.0
-3.4
128.3
33.7
9.5
49.4
21.7
16.2
14.8
42.5
20.1
15.3
14.0
23.3
13.4
8.5
6.0
32.7
14.1
10.8
9.5
48.6
78.8
64.2
47.6
31.5
50.6
49.4
41.8
3/10A 119,210
3/11E
3/12E
157,595
175,806
Company Represented By:
Mr Kevin D'sa, VP - Finance
Key Takeaways
Volume outlook robust; maintains FY11 volume guidance 4m units
It is confident of achieving 4m volumes in FY11, with 3.6m motorcycles and 0.4m 3-
wheelers. It expects market share to increase from 29% to 31% over six months. In
the long run, it aims to increase market share to 33%, but expects it to be a challenge.
The deregulation of the permit system for three wheelers in Tamil Nadu will ensure
a run-rate of 38,000/month for three wheelers over next three months. It expects
gradual deregulation of permits in other states, boosting three wheeler demand.
Its focus is to maintain margins over market share by investing in brands. Similar
view of Hero Honda will augur well for the pricing environment.
EBITDA margins to improve over 1QFY11
The company expects EBITDA margins to improve over 1QFY11 levels, with 2QFY11
EBITDA margins of ~21% and 2HFY11 margins of over 20%, translating into EBITDA
margins of over 20% in FY11.
Margin improvement in 2QFY11 would be driven by RM cost savings, the benefit of
price increases and increasing contribution from its Pantnagar plant.
But Bajaj Auto expects advertising and promotion expenses to increase in the rest
of FY11, from very low levels of 1QFY11.
Plans to offer interest subvention scheme to manage inventory
The company is planning to introduce an interest subvention scheme in a few days,
with the intention of bringing forward some of festive seasonal demand and managing
inventory among dealers. The move is not demand led.
It expects to bring forward retail sales of 10-15,000 units/month.
Although details are unavailable, we don't expect a meaningful impact on margins
as only 20-25% of volumes are on credit.
Other takeaways
Bajaj Auto plans to double exports to 2m by FY15 - a CAGR of 19%.
Production bottlenecks are easing. This, along with ongoing expansion will result in
FY11 exit capacity of 5m units.
There are no major product launches lined up for FY11 as the portfolio is relatively
fresh (Pulsar
135cc, Discover 100 and Discover 150cc, Avenger 220cc).
Valuations and view
Volume growth is expected to stay strong, margins are expected to sustain at higher
levels due to operating leverage, product mix being skewed towards high margin products
and a ramp-up at Pantnagar. The stock is valued at 16.2x FY11E EPS and 14.8x FY12E
EPS. Maintain
Buy
with a target price of Rs2,760 (~15x FY12E EPS).
Covering Analyst(s):
Jinesh Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Sandeep Patil
+91 22 3982 5418
Sandeep.Patil@MotilalOswal.com
August 2010
22

Sector:
Automobiles
6th Annual Global Investor Conference
Mahindra & Mahindra
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
MM IN
573.5
654
8.1
677 / 367
4 / 17 / 26
YEAR
END
NET SALES S/A PAT
(RS M)
(RS M)
CON.PAT ADJ.EPS
(RS M)
(RS)
CONS.
CONS,
ROE
(%)
ROCE
(%)
EV/
EV/
EPS (RS) P/E (X)
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
130,937
186,021
225,577
262,678
9,297
20,451
24,287
27,978
15,047
24,402
33,212
24,402
16.2
35.7
42.3
48.8
26.2
42.6
57.9
68.3
25.0
15.4
11.3
9.6
17.7
26.1
23.1
22.0
12.9
25.8
23.7
23.9
2.6
1.8
1.4
1.1
29.8
10.8
9.4
7.6
Company Represented By:
Mr K Chandrasekar, SR VP - Fin
Ms Sandhya Sharma, SR GM- Fin
Mr Rajen Kavadia, Manager-Fin
Key Takeaways
Volume growth outlook remains robust
The management maintained its guidance of volume growth of 10-14% in the auto
and tractor segments, with the company growing at-least in line with the industry.
Its short-term volume growth is being impacted by supply constraints on fuel injection
system, castings and tyres, which are expected to ease from 3QFY11 onwards.
Volume growth is expected to be driven by 6-7 new product launches in FY11 and
new products launched in 2HFY10 (Maximmo and Gio).
Maximmo (an LCV competing with Ace) will be launched on a pan-India basis in
2QFY11 as production ramps up at its recently inaugurated Chankan plant.
Improved profitability expected, driven by RM cost savings
M&M expects margins to improve from the 1QFY11 level due to RM cost savings and
higher operating leverage. Adjusting for MVML (the Chakan plant), ramp-up of
operations at the Chakan plant would support margins through operating leverage.
Net cash will drive treasury income and an increasing contribution from the tax
exempt plant result in lower tax provisioning, boosting PAT.
Plans to launch 6-7 products in FY11; new SUV platform in 1QFY12
M&M plans to launch 6-7 variants of Xylo and Maximmo in FY11.
The new SUV platform is expected to be launched in 1QFY12.
In tractors, M&M has soft launched its new 15HP tractor, Yuvraj, in Gujarat. It didn't
indicate a timeline for the pan-India launch.
Ssangyong Motors, a good fit at a price
The management believes Ssangyong is a good fit as it offers access to its SUV
product portfolio and a marketing network in South Korea, Russia and other countries.
It indicated that it would not aggressively bid for it.
Other takeaways
M&M plans to set up a new unit for tractors in South India (most likely in Tamil
Nadu), as there is limited scope to de-bottleneck its capacity.
To offset the impact of a slowdown in demand from telecom for its gensets, M&M
has expanded its product basket and has gensets from 5kVA to 320kVA and expects
the segment to drive growth.
Valuations and view
We are positive about M&M's prospects, driven by the dominance in the core business
of UVs and tractors, coupled with cheap valuations. Despite its exciting prospects, M&M
trades at a discount to most of its peers. The stock trades at 11.3x FY11E and 9.6x
FY12E consolidated EPS. Maintain
Buy
with a target price of Rs764 (FY11-based SOTP).
Covering Analyst(s):
Jinesh Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Sandeep Patil
+91 22 3982 5418
Sandeep.Patil@MotilalOswal.com
August 2010
23

Sector:
Banking, Finance & Insurance
6th Annual Global Investor Conference
Axis Bank
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
AXSB IN
405.2
1,332
11.7
1,399 / 797
3 / 15 / 34
YEAR
END
NET INCOME
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
CAR
(%)
ROAE
(%)
ROAA
(%)
P/ABV
(X)
(RS) GROWTH (%)
3/09A
3/10A
3/11E
3/12E
65,831
89,503
109,113
131,500
18,154
25,145
31,749
39,161
50.6
62.1
78.4
96.7
68.9
22.7
26.3
23.3
26.3
21.5
17.0
13.8
4.7
3.4
2.9
2.5
13.7
15.8
14.2
12.7
19.1
19.2
18.3
19.4
1.4
1.5
1.6
1.6
4.8
3.4
2.9
2.5
Company Represented By:
Mr Shishir Mankad,
VP - Finance & Accounts
Key Takeaways
Loan growth of 1.3x industry average
Although systemic credit growth has picked up, the base (pick up from different
segments) requires broadening.
The management sees industry loan growth of 20% in FY11 and aims to grow loan
book at 1.3x industry average on a lower base loan growth is expected to be 35%
plus in 2Q and 3QFY11.
Incremental loans disbursement for large corporates in 1QFY 11 was Rs7.2b, of
which 70-75% were in the telecom sector. About 40% of the incremental loan to the
telecom sector was for six months and rest, for 12 months.
NIMs to decline gradually from 1QFY11 levels
On a reported basis the management expects full year margins to be 3.5-3.6% for
FY11 (3.7% in 1QFY11).
The management believes it can sustain CASA ratio at 40%.
The bank raised its deposit rates on 2 August 2010 and expects the incremental
deposit rate to increase gradually by 1% in FY11.
Bank to maintain asset quality
The management aims to control credit cost at 1.2-1.3% of the loan book for FY11.
Cumulatively Axis Bank restructured loan book of Rs31b out of which Rs4.6b (14.8%
of the restructured book) has slipped into NPA. The management expects maximum
slippages to be contained below ~25% of restructured book.
The management expects incremental slippages from the restructured book will
spread over quarters and is not expected to be lumpy.
Other highlights
Axis Bank plans to add 200 new branches in FY11 to its network of 1,050 branches.
Going ahead, fee income growth will roughly track asset growth.
Cost to income ratio will be maintained at 40-45%.
Valuations and view
We estimate BV of Rs459 and Rs538 in FY11 and FY12 respectively. We expect EPS
to be Rs78 in FY11 and Rs97 in FY12. The stock trades at 2.9x FY11E BV, 2.5x FY12E
BV and 17x FY11E EPS, 14x FY12E EPS. We expect RoE of ~18% in FY11 and ~19%
in FY12 and RoA of ~1.6% over FY10-12.
Maintain
Buy
with FY12 based revised target price of Rs1,475.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010
24

Sector:
Banking, Finance & Insurance
6th Annual Global Investor Conference
Bank of India
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
BOI IN
525.9
437
5.0
475 / 303
18 / 12 / 16
YEAR
END
NET INCOME
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
CAR
(%)
ROAE
(%)
ROAA
(%)
P/ABV
(X)
(RS) GROWTH (%)
3/09A
3/10A
3/11E
3/12E
85,508
83,726
99,520
117,437
30,077
17,411
28,604
34,446
57.2
33.1
54.4
65.5
49.7
-42.1
64.3
20.4
7.6
13.2
8.0
6.7
2.0
1.8
1.5
1.3
13.0
12.9
11.7
10.6
29.2
14.2
20.5
20.9
1.5
0.7
0.9
0.9
2.0
2.0
1.7
1.4
Company Represented By:
Mr Alok Misra, CMD
Mr B.A.Prabhakar, ED
Mr M Narendra, ED
Mr P.N. Ramaswamy, GM
Mr Ravi Kumar, DGM
Key Takeaways
Asset quality to improve
Addition to gross NPAs for 1QFY11 was Rs6.2b, (annualized slippage ratio of 1.4%)
and included Rs1.3b due to the agri debt relief scheme.
The management aims to control slippages at Rs5b-6b/quarter in absolute terms
and to contain gross NPAs for FY11 in absolute terms at or below FY10 levels.
The management also targets recoveries/ upgrades of Rs25b in FY11. This, in turn,
will lead to a fall in FY11 credit costs to 70-80bp v/s 1.15% in FY10.
PCR, including technically written-off accounts were 68.3%. The shortfall to reach
coverage ratio of 70% is a mere Rs800m.
Restructured accounts getting stabilized
Outstanding restructured accounts at the end of 1QFY11 were Rs101.3b, of which
Rs87b pertains to domestic loans and the rest to international operations.
Cumulatively slippages from restructured accounts (of more than Rs10m) have been
~Rs17b, which is highest in the industry as a percentage of the restructured book.
BOI said most of the accounts that slipped were on consortium lending.
To return to pre-FY10 profitability
BOI expects the 1QFY11 profit of Rs7.3b to continue through FY11.
It aims to improve NIMs from the current 2.89% to ~3% in FY11.
BOI does not expect further benefits from re-pricing of deposits and guides for
reduction in cost of deposits coming only from an increase in the CASA mix.
BOI estimates a ~20% increase in employee expenses, however cost to income
ratio is targeted at 36-38%.
BOI aims to have a 3,500 branches (3,236 in FY10) and 1,500 (820 in FY10) ATMs
by March 2011 and enhance its overseas presence.
Valuations and view
Stability in asset quality is a key factor in BOI’s FY11 performance. In FY10, higher
slippages kept NIMs subdued and resulted in higher credit costs.
We expect BoI to post EPS of Rs54 in FY11 and Rs66 in FY12. BV will be Rs287 in
FY11 and Rs339 in FY12. The stock trades at a P/E of 6.7x FY12E EPS and P/BV of
1.3x FY12E BV.
Under Review.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010
25

Sector:
Banking, Finance & Insurance
6th Annual Global Investor Conference
Dewan Housing Finance
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
DEWH IN
104.0
287
0.6
295 / 120
20 / 41 / 96
YEAR
END
NET INCOME
(RS M)
PAT
(RS M)
EPS
(RS)
EPS
GROWTH (%)
P/E
(X)
P/BV
(X)
ROAE
(%)
ROAA
(%)
P/ABV
(X)
3/09A
3/10A
3/11E
3/12E
1,996
3,227
4,757
6,629
863
1,507
2,317
3,273
14.3
18.4
22.3
31.5
28.3
28.8
21.3
41.2
19.3
15.0
12.4
8.8
3.6
2.7
1.9
1.6
20.1
22.7
19.7
19.8
1.6
1.9
2.0
2.1
4.0
2.9
2.0
1.7
Company Represented By:
Mr Kapil Wadhawan, CMD
Mr P Chaturvedi, GM
Key Takeaways
Loan growth to stay strong
The management aims to sustain its high growth momentum over FY11 and FY12
and expects growth of 30-35% in FY11.
It targets disbursement of Rs55b in FY11 (Rs38.6b in FY10) and expects to increase
its balance sheet size to Rs250b by FY13 (Rs100b in FY10).
Adequately capitalised for next phase of growth
Current CAR is healthy at 22.81% as on 1QFY11 (tier-I 22.2%).
For a balance sheet size of Rs250b it estimates net worth of ~Rs20b (currently
~Rs14b). With a plough back of profits in three years it expects to reach the estimated
net worth.
Current leverage for DHFL is ~7x and it could be increased to 12x without downgrades
from ratings agencies.
The management expects to maintain RoA of over 2% plus going ahead.
Provision coverage to rise to 65-70% by FY11
The management expects to shore up its provision and improve the coverage ratio
from the current 36% to 65-70% by the end of FY11. This will be done by booking
substantial gains from selling its investment (primarily HDIL) in the current year.
The gains would be tax free (being long term capital gains).
Other highlights
DHFL expects to disburse Rs3.5b-4b in FY11 through a tie-up with Punjab and Sind
Bank and United Bank. The company expects the proportion of disbursements through
this tie-up to be 8-10% going ahead.
DHFL along with IFC promoted Aadhar Housing Finance Pvt. Ltd, which will focus on
the low income housing segment in states like UP, Bihar, MP and Chattisgarh.
The business will complement the existing business, which is not present in these
areas. Average ticket size would be 0.55m-0.6m.
In FY11, DHFL aims to earn ~Rs600m through fee based initiatives (Rs310m in
FY10) and Rs550m-600m (Rs440m in FY10) from processing fees.
Valuation and view
We expect DHFL to post EPS of Rs22 and Rs32 in FY11 and FY12. BV will be Rs144
in FY11 and Rs170 in FY12. RoA and RoE will stay attractive at ~2% and ~20%,
respectively, over FY10-12. The stock trades at 1.6x FY12E BV and 8.8x FY12E EPS.
Maintain
Buy
with an SOTP based target price of Rs318.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010
26

Sector:
Banking, Finance & Insurance
6th Annual Global Investor Conference
HDFC
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
HDFC IN
289.9
3,058
19.2
3139 / 2210
1 / 14 / 7
YEAR
END
NET INCOME
(RS M)
PAT
(RS M)
ADJ. EPS
EPS
P/E
(X)
P/BV
(X)
CAR
(%)
CORE ROAE ROAA
(%)
(%)
P/ABV
(X)
(RS) GROWTH (%)
3/09A
3/10A
3/11E
3/12E
35,852
42,978
51,127
60,526
22,825
28,265
33,875
40,325
80.2
98.4
116.8
139.1
17.5
22.7
18.7
19.0
32.0
23.7
19.1
15.0
6.6
5.9
5.1
4.4
15.1
14.6
14.1
13.7
23.3
25.3
25.5
25.8
2.6
2.7
2.8
2.8
7.6
5.9
4.8
3.9
Price is adj.for value of key ventures. BV is adj. by deducting invest. in key ventures from net worth
Company Represented By:
Mr Conrad D'souza, SGM
Key Takeaways
Robust prospects for mortgage financing
HDFC is optimistic about demand for housing finance. India's mortgage to GDP ratio
of 7% is low compared with countries like the UK and the US, where it is 80%+.
Key growth drivers for housing are: (1) increased affordability, mainly due to increased
disposable income, (the average house value has fallen from 22x annual income in
1995 to 4.7x in 2010), (2) rising urbanization, (28% in 2010 expected to increase to
40% by 2030), and (3) favorable demographics (the average age of home buyers
is 35, and currently, ~60% of the Indian population is below 30 years old).
Government statistics place the housing shortage in India at 25m units.
Business growth to stay high with stable spread
Management expects on pre-sell basis loan growth will be 20-25% for FY11.
On an AUM basis, HDFC will continue to keep the individual to corporate loans ratio
at 70:30. Owned branches and affiliates will continue to be a dominant source for
loan growth (currently contributing 92%).
HDFC maintains a standard of income based lending, thereby canceling out exposure
to volatility in real estate prices and ensuring stable business growth and healthy
asset quality.
The introduction of a base rate will not have a significant impact on borrowing costs
for HDFC, as it has the flexibility to borrow incremental money through bond and
debenture issues, which even banks can subscribe to at below base rates.
Margins will sustain at a traditional 2.15-2.25%.
Other highlights
HDFC plans to sustain its cost/income ratio at ~8% going forward.
HDFC plans to achieve breakeven in its life insurance business in FY11, and expects
to turn profitable by FY12.
HDFC plans to grow RoE by ~100bp every year.
Valuations and view
We expect EPS CAGR of 19% over FY10-12. We expect core RoE of 25-26% in FY11
and FY12. The stock trades at 3.9x FY12E AP/ABV (price adjusted for the value of
key ventures and book value adjusted for investment in those ventures) and AP/E of
15x. Valuations are rich. Maintain
Neutral.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010
27

Sector:
Banking, Finance & Insurance
6th Annual Global Investor Conference
HDFC Bank
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
HDFCB IN
457.7
2,114
21.0
2,141 / 1,353
6 / 18 / 29
YEAR
END
NET INCOME
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
CAR
(%)
ROAE
(%)
ROAA
(%)
P/ABV
(X)
(RS) GROWTH (%)
3/09A 107,118
3/10A 121,942
3/11E
3/12E
150,850
181,700
22,449
29,487
39,565
51,264
52.8
64.4
86.4
112.0
27.7
22.1
34.2
29.6
40.1
32.8
24.5
18.9
6.0
4.5
3.9
3.4
15.8
17.4
15.8
14.0
15.6
16.1
17.1
19.2
1.3
1.5
1.6
1.7
6.1
4.5
4.0
3.4
* Includes pro forma merged figures for HDFC Bank and CBoP
Company Represented By:
Mr Sashi Jagdishan,
Head - Finance
Mr Amit Khanna
Key Takeaways
To grow at 5% higher than industry average
The management maintains its growth guidance of a few percentage points higher
than the industry. It is confident of achieving 25%+ loan growth in FY11. Corporate
loans and retail secured loans (auto, home loans, CV and CE) will be growth drivers.
Looking at growing unsecured retail loans selectively and growth is likely to come
from the existing customer base.
The proportion of corporate loans will increase due to increasing capex and working
capital requirements.
NIMs to sustain at 4%+, high CASA mix a boon
NIM at 4.3% in 1QFY11 declines 10bp QoQ, despite the impact of savings deposit
re-pricing, higher share of priority sector loans and the full impact of CRR. The
management expects margins to sustain at 4.2%+ in FY11.
Core CASA ratio at the end of 1QFY11 improved to 49% v/s 45% a year earlier.
Healthy CASA base will be a boon in a rising interest rate scenario.
Interest rates are likely to go up considering the liquidity crunch and strong loan
growth. The bank has increased deposit rates by 25-75bp to boost retail deposit
growth.
Other highlights
Fee income growth increased to 17% YoY in 1QFY11 v/s 15% in FY10. Going ahead
it expects fee income growth to be 16-18%.
Improving operating efficiency from CBoP branches will improve the core cost to
income ratio. The management aims to stabilize it at 46-48%.
As CBoP book has run down to Rs10b, slippages have come down to a greater
extent.
Bank expects credit costs to stay low as asset quality is healthy. For 1QFY11 credit
cost was 1.1%.
With a growing balance sheet size, HDFC Bank expects ROAs to stabilize at 1.4-
1.5%.
Valuations and view
We estimate EPS at Rs86 in FY11 and Rs112 in FY12. We expect RoE to be 17% in
FY11 and 19% in FY12. We estimate BV of Rs538 for FY11 and Rs627 for FY12.
The stock trades at 3.9x FY11E and 3.4x FY12E BV, and 24.5x FY11E and 18.9x
FY12E EPS.
Given our comfort with asset quality, core operating parameters and earnings growth
outlook, we believe premium valuations will sustain. Maintain
Buy.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010
28

Sector:
Banking, Finance & Insurance
6th Annual Global Investor Conference
ICICI Bank
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
ICICIBC IN
1,114.9
970
23.4
1,010 / 691
11 / 5 / 12
YEAR
END
NET INCOME
(RS M)
PAT
(RS M)
EPS
EPS
AP/E*
(X)
AP/ABV*
(X)
CAR
(%)
ROAE
(%)
ROAA
(%)
P/ABV
(X)
(RS) GROWTH (%)
3/09A
3/10A
3/11E
3/12E
159,703
155,920
159,923
187,798
37,581
40,250
51,230
63,883
33.8
36.1
46.0
57.3
-9.7
6.9
27.3
24.7
28.7
26.9
21.1
16.9
24.3
21.7
16.5
12.7
2.5
2.3
2.0
1.8
15.5
19.4
18.9
16.8
9.3
9.7
11.8
13.6
1.0
1.1
1.4
1.5
* Price adjusted for value of key ventures and BV adjusted for investments in those key ventures
Company Represented By:
Ms Chanda Kochhar, MD & CEO
Mr Rakesh Jha, Deputy CFO
Ms Ranju Sigtia, AGM
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Management expects loan growth of 15-16% in FY11
ICICI Bank intends to resume its growth strategy and continue to focus on 4C’s
(increasing CASA base, Cost reduction, Credit quality, and Capital conservation).
The management expects overall loan growth of 15-16% for FY11. Domestic loan
growth would be around the industry average ~20%. In FY12-13, loans are likely to
grow 20-22%, again driven by domestic loans.
The share of CASA in overall deposits would remain at least 35-37% even in a high
business growth scenario. Integration of Bank of Rajasthan branches would aid
higher CASA share.
Targeting to improve domestic NIM to 3% and on international operation to 1%.
Fee income to grow at 15%, C-I ratio to remain at ~40%
Fee income will grow in line with business growth, with fees from the corporate
segment growing at a higher rate.
While there may not be absolute reduction in costs going ahead, C-I ratio would be
maintained at ~40% (at ~1.6% as a percentage of average assets).
Other highlights
Improving RoE to 15% will be a key focus area, with RoA improving to 1.4-1.5% by
FY12.
The bank is awaiting approval from RBI for completing the merger of Bank of
Rajasthan. It expects the merger to boost CASA base, enhance third-party product
distribution, and support branch-centric banking model.
The new IRDA guidelines augur well for the future of the life insurance industry and
would benefit policy holders. Going ahead, ICICI Bank’s focus would be to make
insurance business more profitable by cutting cost and optimizing commission
payments, thus protecting margins.
There would be no immediate unlocking of value from the insurance business
considering the change in regulatory environment. Further, as the insurance business
has turned profitable, it does not need fresh capital to grow.
Valuation and view
We expect ICICI Bank to report EPS of Rs46 in FY11 and Rs57 in FY12. BV would be
Rs493 in FY11 and Rs529 in FY12. ABV (adjusted for investment in subsidiaries)
would be Rs378 in FY11 and Rs414 in FY12.
Adjusted for FY12E value of subsidiaries at Rs241/share (post 20% holding company
discount), the stock trades at 1.5x FY12E ABV (adjusted for investment in subsidiaries)
and 12.7x FY12E EPS. Our FY12E SOTP value is Rs1,070.
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010
29

Sector:
Banking, Finance & Insurance
6th Annual Global Investor Conference
ING Vysya Bank
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
VYSB IN
120.0
343
0.9
376 / 210
-7 / 25 / 41
YEAR
END
NET INCOME
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
CAR
(%)
ROAE
(%)
ROAA
(%)
P/ABV
(X)
(RS) GROWTH (%)
3/07A
3/08A
3/09A
3/10 A
7,313
9,170
11,973
14,501
889
1,569
1,888
2,422
9.8
15.3
18.4
20.2
873.7
56.6
20.1
9.7
35.1
22.4
18.6
17.0
3.1
2.5
2.2
1.9
10.6
10.2
11.7
14.9
9.4
13.0
12.5
12.7
0.5
0.7
0.7
0.7
3.4
2.6
2.4
2.0
Company Represented By:
Mr Shailendra Bhandari, MD& CEO
Key Takeaways
Move to expand presence in India
ING Vysya Bank is a South India-based bank, with 70-75% of its 483 branches in the
southern states.
The management plans to expand its presence in India. It has 60 pending branch
licenses at the start of FY11, 50 in non-southern states.
Most of the branches are in rural and semi-urban areas and hence of the 60 pending
licenses it plans to open 50 in metro and tier-I cities.
Of the 60, it has opened 15 branches and expects to open the rest by March 2011.
Focus on retail, SME (business banking)
With systems and processes in line, the management is focusing on growing high
yielding secured retail and SME loans.
Within the retail segment focus will be on secured lending. ING Vysya Bank plans to
relaunch its CV and auto-financing business in FY11.
The management expects that with high yields on SME loans and credit costs
declining to 0.5%, this segment would contribute significantly to ROAs.
It expects the wholesale business to sustain growth. In this segment the bank will
focus on granting working capital loans. The bank will leverage the ING brand to
grow in this segment.
In 1QFY11, ING Vysya Bank provided no funds to the telecom sector for the 3G and
BWA auction.
Asset quality to improve
The management expects asset quality to improve from 2QFY11. In 1QFY11, GNPAs
had increased 13% QoQ.
Beyond FY11 it expects credit loss to fall and be in line with the industry trend.
Other highlights
Cost to income ratio improved from 69% (FY07) to 55% (FY10), and the management
believes it will fall further even with branch expansion as expected revenue growth
will be higher than the incremental increase in cost.
Valuations
The stock trades at 1.8x FY10 BV and 16.9x FY10 EPS.
Not Rated.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010
30

Sector:
Banking, Finance & Insurance
6th Annual Global Investor Conference
Kotak Mahindra Bank
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
KMB IN
348.1
824
6.2
878 / 669
4 / -2 / 2
YEAR
END
NET INCOME
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
CAR
(%)
ROAE
(%)
ROAA
(%)
P/ABV
(X)
(RS) GROWTH (%)
3/09A
3/10A
3/11E
3/12E
30,045
49,017
54,440
66,493
6,546
12,402
15,576
19,185
18.9
35.6
42.7
52.6
-37.7
88.1
19.9
23.2
44.1
23.5
19.6
15.9
4.4
3.7
2.8
2.4
22.5
19.3
18.0
17.0
10.8
17.9
17.0
16.6
1.7
2.7
2.6
2.5
4.6
3.8
2.9
2.4
Company Represented By:
Mr Dipak Gupta, ED
Mr Jaimin Bhatt, Group CFO
Mr R Sundarraman, Exec. VP - IR
Key Takeaways
Loan growth of 30-35%; long term NIM 5-5.5%
FY11 loan growth is expected to be 30-35% with a focus on corporate and secured
retail loans.
The management will consider growing the personal loan portfolio selectively and
unlike 2007, large volume growth is not expected in personal loans.
The management expects NIM to fall to a sustainable level of 5-5.5% in the medium
to long term. In the near term, due to the benefit of current capital raising, NIM are
likely to be 5.5%+.
A fall in credit costs with improving asset quality will be an earnings driver.
Lending business to drive profitability
The Indian financial services sector's model is likely to be bank-led and Kotak Mahindra
expects the share of the lending business to rise. As on 1QFY11, the lending business
contributed 75% to profits.
The brokerage industry continues to be on the path of fragmentation and margin
pressure is likely to continue. The management sees future consolidation in the
broking industry but these are early days yet.
Due to stiff competition in investment banking, the pressure on profitability will
continue despite a large deal pipeline.
Insurance industry to face profitability pressure in near term
New regulations in the insurance industry will put pressure on margins across the
industry. But Kotak Mahindra Bank believes it is better placed due to its conservative
focus on cost and capital in the past.
To improve profitability, Kotak Life will focus on traditional products and reducing
costs aggressively.
Other highlights
With 1QFY11 CAR at 16.9% and tier-I ratio at 15%+, the bank is adequately capitalized
to grow. With SMBC money, CAR will be ~20%.
Standalone bank branch network is expected to increase to 320 by the end of FY11
from 262 branches currently.
Valuation and view
We expect Kotak Mahindra Bank to post EPS (excluding insurance) of Rs43 and
Rs53 in FY10 and FY11 respectively. BV will be Rs299 and Rs352 respectively.
RoA will be superior at 2.5%+ but lower leverage will keep RoE at 16%+ over FY11-
12. Adjusted for insurance value, the stock trades at a P/E of 14x FY12E, P/BV of
2.3x FY12E. Maintain
Neutral
with a target price of Rs843.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010
31

Sector:
Banking, Finance & Insurance
6th Annual Global Investor Conference
Punjab National Bank
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
PNB IN
315.3
1,097
7.5
1,130 / 648
0 / 13 / 40
YEAR
END
NET INCOME
(RS M)
PAT
(RS M)
EPS
EPS
AP/E*
(X)
AP/ABV*
(X)
CAR
(%)
ROAE
(%)
ROAA
(%)
P/ABV
(X)
(RS) GROWTH (%)
3/09A
3/10A
3/11E
3/12E
98,966
120,882
143,047
167,364
30,909
39,054
43,958
53,953
98.0
123.9
139.4
171.1
50.9
26.4
12.6
22.7
11.2
8.9
7.9
6.4
2.6
2.1
1.8
1.4
14.0
14.2
12.6
11.5
25.8
26.6
24.4
24.7
1.4
1.4
1.3
1.3
2.7
2.2
1.9
1.5
Company Represented By:
Mr Mohan Tanksale, ED
Ms Aarti Mattoo, GM
Key Takeaways
NIM to remain superior, insulated against MTM
PLR increased by 75bp recently, which will lead to 60-65% loan repricing with
immediate effect.
Strong liability franchise (40% CASA ratio) and repricing on the asset side will lead
to stable margin of ~4% in the near term.
Full transition of pricing of loans to the base rate will be complete by March 2011.
Average duration of liabilities is 1-1.5 years hence there would be a lag in repricing
deposits.
On the investment book, 80% of investments are in the HTM category and within
AFS too, investments subject to mark to market risk constitute a lower proportion
(2.24 years duration).
Asset quality is within management levels
Delinquencies from restructured loans are 8% of the loan book and in a worst case
scenario, slippages are expected to be 15% of the book.
NPAs for loans above Rs1m are system recognized and PNB expects full transition
by March 2011.
Slippages will remain within the comfort level and we see no cause for concern.
Management expects GNPAs to remain below 2% by end FY11.
Key challenges
The average age of PNB employee is 50 and it expects natural attrition of ~2,000
people a year.
To leverage its technology base to boost its fee income base.
Other highlights
PNB targets loan growth of 20-22% in FY11 and expects this growth rate to sustain
over the medium to long term as there is enough opportunity to grow in retail and
the mid-corporate segment.
PNB would also like to increase the proportion of its international loan book from the
current proportion of 3%, but it admits returns would be lower from this business.
Valuations and view
We expect PNB to post EPS of Rs139 in FY11 and Rs171 in FY12. BV would be Rs626
in FY11 and Rs762 in FY12.
We expect RoE and RoA to remain superior at ~24% and 1.3%+ over FY10-12.
Maintain
Buy
with a target price of Rs1,225 (1.6x FY12E BV).
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.agarwal@MotilalOswal.com
August 2010
32

Sector:
Banking, Finance & Insurance
6th Annual Global Investor Conference
Rural Electrification Corporation
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
RECL IN
858.7
313
5.8
322 / 178
2 / 20 / 44
YEAR
END
NET INCOME
(RS M)
Adj PAT
(RS M)
EPS
EPS
P/E
(X)
P/RBV
(X)
ROE
(%)
ROA
(%)
P/ADJ BV
(X)
(RS) GROWTH (%)
3/09A
3/10A
3/11E
3/12E
20,439
27,963
35,974
44,768
12,721
20,012
25,354
31,714
16.4
20.3
25.7
32.1
50.6
23.3
26.6
25.1
19.0
15.4
12.2
9.7
83
112
128
149
3.8
2.8
2.4
2.1
21.2
22.0
21.3
23.2
3.1
3.4
3.3
3.3
Assuming dilution of 15% in FY10 at Rs203/share
Company Represented By:
Mr HD Khunteta,
Director - Finance
Key Takeaways
Business growth to remain strong
With undisbursed sanctions of over Rs1t, loan growth outlook for the next couple of
years remains robust. REC has guided 30% loan growth in FY11 and expects the
generation-T&D mix to be 50:50 by FY12.
It expects incremental disbursement in the private sector to be robust, with loan
book shifting in favor of the private sector from ~7% in 1QFY11 to 18-20% by FY12.
REC plans to raise Rs280b in FY11 to fund loan growth. The resources raised would
be from various sources like tax-free bonds, ECB, infra-bonds, etc.
Spread to sustain at 2.8-3%
The management expects favorable ALM to offset any rise in cost of funds and
spreads to be maintained.
Of the total loan book, 75% carries a 3-year reset clause. Upward resets on loans
(Rs100b in FY11, ~14% of loan book) would offset the impact of higher incremental
borrowing cost.
REC is planning to raise US$400m through overseas borrowings in 2QFY11; it expects
the borrowing cost to be low.
Applied for Infrastructure NBFC status
REC has applied to the RBI for the grant of the status of Infrastructure NBFC.
Approval would result in higher exposure limit to private projects for REC and enable
it to raise money through the issuance of infra-bonds and a higher borrowing limit
for ECBs (50% of net worth).
The new status would require CAR of 15% (Tier-I: 10% and Tier-II: 5%). REC’s
current CAR is ~20.9% and is entirely tier-I capital. REC has no plans to raise equity
capital till March 2012.
Other highlights
The management targets fee income of Rs.1.1b for FY11. Of this, income from
RGGVY scheme will be ~Rs550m, which will mainly accrue in 3Q and 4QFY11.
Asset quality is well protected, with 25% of loans being government guaranteed
and 83% of loans under the escrow mechanism. Further, including subsidy received
from the government, the financial health of SEBs is improving.
Valuation and view
We expect EPS CAGR of ~26% over FY10-12. EPS would be Rs26 in FY11 and Rs32
in FY12. We expect BV of Rs128 in FY11 and Rs149 in FY12. The stock trades at 9.7x
FY12E EPS and 2.1x FY12E BV. Maintain
Buy.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010
33

Sector:
Banking, Finance & Insurance
6th Annual Global Investor Conference
Shriram Transport Finance
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
SHTF IN
225.5
699
3.4
723 / 310
15 / 24 / 114
YEAR
END
NET INCOME
(RS M)
PAT
(RS M)
EPS
(RS)
EPS
GROWTH (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROA
(%)
P/ABV
(X)
3/09A
3/10A
3/11E
3/12E
17,535
22,528
31,875
38,669
6,124
8,731
13,204
15,851
30.1
38.7
58.5
70.3
56.8
28.7
51.2
20.0
23.2
18.1
11.9
9.9
6.3
4.1
3.2
2.5
30.3
28.6
30.2
28.5
3.1
3.9
5.4
5.4
6.4
4.2
3.2
2.6
Company Represented By:
Mr Sanjay Mundra, VP IR
Key Takeaways
RBI guidelines on securitization will not have any impact
New RBI guidelines relating to securitization will not impact SHTF, as most of its
transactions are bilateral and are not covered under RBI guidelines
It is carrying unrecognized securitized income of ~Rs20b on the books.
AUM expected to reach Rs500b by FY13
SHTF targets AUM of Rs500b by FY13. It expects net increase of Rs60b-70b in asset
book every year. This translates into an annualized growth rate of 25-30%.
The new CV market is likely to grow at 25-30% for the next 2-3 years. This coupled
with the robust growth over 2004-2008 will ensure stable growth opportunity for
SHTF.
Asset-liability well managed
Average duration of assets is 38-39 months while 70% of the liabilities are fixed.
Resources raised through securitization constitute 36% of the total funding, while
bank borrowings constitute ~30%.
SHTF expects to sustain its margins on AUM at~8%.
Fee income and construction equipment finance augur well
Fee income initiatives like ‘truck bazaars’ and ‘auto malls’ are likely to yield Rs500m-
600m in FY11 as against Rs300m in FY10.
Construction equipment finance business is likely to commence in 2QFY11, and the
management expects AUM to touch Rs60b by March 2012.
Asset quality well protected
Payments to field officers are linked to (1) lending, (2) collections done, and (3)
quality of loans granted by them. This ensures strong growth and healthy asset
quality.
Further, with variable pay being almost 50% of the total pay, employee productivity
remains high.
Valuation and view
We expect SHTF to report EPS of Rs59 in FY11 and Rs70 in FY12. We estimate BV
at Rs219 for FY11 and Rs277 for FY12.
The stock trades at 2.5x FY12E BV and 9.9x FY12E EPS. We expect RoE to be strong
at ~30% during FY11-12. We maintain
Buy.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010
34

Sector:
Banking, Finance & Insurance
6th Annual Global Investor Conference
State Bank of India
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range
1, 6, 12 Rel Per
SBIN IN
634.9
1,845
33.8
2,500 / 1,512
11 / -7 / 32
YEAR
END
NET INCOME
(RS M)
PAT
(RS M)
EPS
(RS)
CONS.
EPS (RS)
CONS.
P/E (X)
P/BV
(X)
CONS.
P/ABV (X)*
CAR
(%)
ROE
(%)
ROA
(%)
3/09A 335,639
3/10A 386,396
3/11E
3/12E
91,212
91,661
143.7
144.4
179.3
226.5
172.6
184.8
226.0
285.4
13.8
12.9
10.5
8.2
2.1
1.8
1.6
1.4
2.3
2.0
1.7
1.5
14.3
13.4
12.5
11.9
17.1
14.8
16.2
17.9
1.1
0.9
1.0
1.1
470,255 113,841
549,821 143,832
* Valuation multiples are adjusted for SBI Life's value
Company Represented By:
Mr Ramnath Chintagunta
CGM - Finance Control
Key Takeaways
Loan growth to be 1-2% higher than industry; sharp improvement in NIM
The management expects loan growth of 20-22% in FY11, as against 18-20% for
the industry.
Loan growth is likely to be widespread across SME, Agri, Retail and Corporate.
Infrastructure is likely to be the biggest growth driver.
CASA growth remains strong and CASA ratio is expected to be flat QoQ.
Management expects to maintain margins in FY11 at near to 4QFY10 levels of 2.96%.
NIMs at 3% will be ~35bp higher than FY10 levels of 2.65%.
Asset quality: sharp improvement expected in 2HFY11
Stress on asset quality has declined considerably.
Higher upgradations and recoveries in 2HFY11 can lead to strong improvement in
asset quality in 2HFY11.
The bank is on track to achieve 70% PCR by 1HFY12.
Other highlights
The bank continues to focus on controlling operating expenses, and improving C-I
ratio and cost to average assets.
Fee income growth is likely to track loan growth.
Focus remains on improving RoA with margin improvement, operating leverage,
and improving fee income growth.
Valuation and view
SBI is likely to achieve the highest core operating profit growth among state-owned
banks in FY11, with (1) margin expansion of 25bp+, (2) loan and fee income growth
of 20%+, and (3) high operating leverage.
Strong core operating profit growth provides significant cushion for higher credit
costs and growth in profits despite lower trading gains.
We expect the bank to report consolidated EPS of Rs226 in FY11 and Rs285 in FY12.
Consolidated BV is expected to be Rs1,500 in FY11 and Rs1,739 in FY12. Adjusted
for value of the insurance business at Rs145/share, the stock trades at FY12E AP/E
of 8.6x and AP/BV of 1.4x
SBI is our preferred large-cap bank stock to play the new growth cycle over FY11-
14. We recommend
Buy,
with a target price of Rs2,925 - an upside of 29%.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010
35

Sector:
Banking, Finance & Insurance
6th Annual Global Investor Conference
Union Bank of India
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
UNBK IN
505.1
321
3.5
333 / 201
-1 / 16 / 22
YEAR
END
NET INCOME
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
CAR
(%)
ROAE
(%)
ROAA
(%)
P/ABV
(X)
(RS) GROWTH (%)
3/09A
3/10A
3/11E
3/12E
52,961
61,672
78,698
93,233
17,265
20,749
25,053
30,643
34.2
41.1
49.4
60.5
24.5
20.2
20.3
22.4
9.4
7.8
6.5
5.3
2.3
1.8
1.5
1.2
13.3
12.5
12.0
11.1
27.2
26.2
25.5
25.4
1.21
1.17
1.16
1.17
2.4
2.0
1.6
1.3
Company Represented By:
Mr N S Mehta, CFO
Key Takeaways
GNPAs nearing peak
While asset quality has been under pressure over the last 4-5 quarters, the
management expects GNPAs to peak by 2QFY11.
The management has guided that slippages are likely to be higher in 2QFY11, as (1)
an agri debt relief scheme amount of Rs3.8b will be recognized as non-performing,
and (2) some slippages from restructured accounts are likely apart from slippages
in the normal course of business.
The bank believes that GNPAs will peak in 2QFY11 and decline thereafter due to
strong upgradations.
Union Bank expects to contain GNPAs at less than ~2.1% for FY11 as compared to
2.2% at the end of 1QFY11.
Adequately capitalized
On a reported basis, the bank’s CAR stood at 12.6%, of which tier-I was 7.9% as at
1QFY11.
In 1QFY11, Union Bank received Rs1.1b of preference capital from the government.
This amount and profits for 1QFY11 have not been accounted under tier-I capital.
Including these, tier-I ratio and CAR are 50bp higher.
Considering the buoyancy in loan growth, the bank will require additional capital to
keep tier-I ratio at 8%+. It has accordingly placed a request with the government.
Confident of growing 5% higher than industry
The management expects loan growth to be ~25% in FY11, while deposits are
likely to grow 22%. Loans grew 30% YoY to Rs1.25t and deposits grew 19% YoY to
Rs1.7t in 1QFY11.
CASA improved to 32.6% in 1QFY11. Management hopes to attain CASA of 35% by
FY12.
Other highlights
The bank will provide Rs2.4b towards pension liability (total liability of Rs12b) in
FY11, of which Rs600m was provided in 1QFY11.
Strong growth in fee income on a higher base is a challenge. However, the
management is confident of 20%+ fee income growth in FY11.
Valuation and view
We expect Union Bank to report EPS of Rs49 in FY11 and Rs61 in FY12. We estimate
BV at Rs214 for FY11 and Rs262 for FY12.
We expect RoA to sustain at ~1.2%+ and RoE at 23%+. We maintain
Buy,
with a
target price of Rs365, an upside of 15%.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010
36

Sector:
Banking, Finance & Insurance
6th Annual Global Investor Conference
Yes Bank
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
YES IN
339.7
304
2.2
311 / 145
9 / 13 / 85
YEAR
END
NET INCOME
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
CAR
(%)
ROAE
(%)
ROAA
(%)
P/ABV
(X)
(RS) GROWTH (%)
3/09A
3/10A
3/11E
3/12E
9,462
13,635
18,665
24,744
3,038
4,777
6,511
8,515
10.2
14.1
19.2
25.1
51.3
37.5
36.3
30.8
29.7
21.6
15.9
12.1
5.6
3.3
2.8
2.3
16.6
20.6
17.7
15.3
20.6
20.3
19.3
21.1
1.5
1.6
1.5
1.4
5.7
3.4
2.8
2.4
Company Represented By:
Mr Rajat Monga,
Group President - Financial
Market and CFO
Mr Jaideep Iyre,
President Financial Manegement
Mr Aparajit Bhandarkar, VP-IR
Key Takeaways
Strong loan growth to continue
Management remains comfortable to grow 2x of the industry average growth.
However, balancing growth with risk-return would be the key.
Yes Bank’s current market share is ~0.6% and management expects this to improve
by 10bp every year till FY15. This will lead to 4x increase in loan book in the next
five years.
NIMs to remain robust
Yes Bank’s business is largely on a floating rate basis. In a rising rate scenario,
while cost of deposits would increase faster (low CASA mix), yield on loans too
would rise in the same proportion. Hence, margins would remain intact.
It has no major exposure to consumer lending (carrying fixed rate of interest) and
~95% of the loan book is linked to PLR.
Average duration of the loan book is 16-17 months whereas average duration of
deposits is at 19-20 months. Therefore YoA and CoD will track the prevailing interest
rates in the economy and improvement in NIMs would depend on pricing power.
New branch addition to boost CASA growth
As at June 2010, the bank had 153 branches. It intends to increase its branch
network to 250 by June 2011 and to 750 by FY15.
Management expects strong growth trajectory in CASA deposits to continue as
existing branches mature (average life 15-16 months) and new branches are added.
Reported CASA ratio was 10.8% (absolute CASA grew 99% YoY) in 1QFY11 and the
management expects to improve CASA ratio by 200-300bp every year.
Other highlights
Traction in non-interest income will be driven by increase in share of transaction
and retail banking while contribution from financial markets will decline.
With GNPA and NNPA of 0.23% and 0.04%, respectively in 1QFY11 and total
restructured book of Rs0.8b (0.31% of the loan book), the management expects
asset quality to remain strong.
Valuation and view
Yes Bank trades at 12.1x FY12E EPS of Rs25 and 2.3x FY12E BV of Rs130. RoA is
likely to remain strong at ~1.5% and increase in leverage would drive RoE to ~20%+
in FY11-12. Maintain
Buy
with a target price of Rs325 (2.5x FY12E BV).
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Abhishek Agarwal
+91 22 3982 5414
Abhishek.Agarwal@MotilalOswal.com
August 2010
37

Sector:
Engineering
6th Annual Global Investor Conference
BHEL
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
BHEL IN
489.5
2,518
26.7
2,585 / 2,105
1 / -6 / -7
YEAR
END
NET SALES
(RS M)
PAT *
(RS M)
EPS*
(RS)
EPS GR.
(%)
P/E*
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/09A 267,880
03/10A 335,728
03/11E 402,936
03/12E 495,431
35,671
46,839
58,141
71,807
72.9
95.7
118.8
146.7
42.1
31.3
24.1
23.5
20.7
24.9
21.2
17.2
5.7
7.3
6.2
5.0
30.1
32.5
32.5
32.3
46.9
51.4
54.6
53.2
2.4
3.3
2.8
2.3
15.1
17.1
12.8
10.3
* Consolidated; EPS is fully diluted
Company Represented By:
Mr WVK Krishna Shankar,
Executive Director - Corporate
Planning and Development
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
FY11 order intake guidance of 16GW; orders from JVs to boost intake
BHEL’s order book as at June 2010 was Rs1,480b (up 19% YoY, up 3% QoQ). In 1QFY11,
BHEL reported order intake of Rs108b, down 15% YoY.
A large part of the intake in 1QFY11 was from BHEL’s JV with the Karnataka State
Electricity Board for 2x800MW Raichur TPS received in April 2010 and a Rs26b
order from Dainik Bhaskar for 2x600MW TPS in Chhatisgarh.
FY11 order intake is likely to be robust given (i) bulk tendering of super critical
projects (11 sets of 660MW each), (ii) project awards by joint ventures (Madhya
Pradesh 2x660/800 in Khandwa and with Maharashtra for 2x660MW in Latur), and
(iii) accelerated award by private players/state utilities/CPSUs. In FY11, we expect
BHEL’s inflows to reach Rs614b, up 4% YoY.
FY11 shop-floor production of 16-17GW
The management is confident of achieving FY11 shop-floor production of 16-17GW
(up 30%). The management indicated that the full benefit of capacity expansion,
from 10GW to 15GW a year, would be realized in 2HFY11.
The FY11 outsourced fabrication tonnage will go up to 0.45mt from 0.1mt in FY06,
representing 35% CAGR over the past five years. This is a major thrust for BHEL to
meet its execution targets for the year.
Other key takeaways
FY11 staff costs as percentage of revenue will be lower than 15.8% posted in FY10.
FY11 raw material costs will be maintained at 1QFY11 levels of 59% as BHEL has
indigenized technology related to transformers, generators, pulverizers and will
extend this to other products in FY11.
On the various JVs for super-critical projects with SEBs, BHEL is likely to book orders
from its JV with Tamil Nadu, Karnataka, Madhya Pradesh and Maharashtra. The JV
order with Tamil Nadu will be booked in 3QFY11 or 4QFY11 and the Maharashtra
and Madhya Pradesh JVs are acquiring land for the projects.
The JV with Toshiba for T&D/HVDC products will bid for most of the nine HVDC
transmission corridors to be built for Rs810b by PGCIL over eight years.
The JV with GE for compressors will help BHEL to pre-qualify for gas-based projects
in future and the NTPC-BHEL JV for EPC/BOP will start construction of its plant in
Andhra Pradesh over 2-3 months. BHEL intends to venture into railway (locomotives),
renewables (solar, wind) and water desalination, investing Rs4b in the ventures.
Valuation and view
Our EPS estimates are Rs119 (up 24%) for FY11 and Rs147 (up 24%) for FY12. Our
price target is Rs2,934 (20x FY12). Maintain
Buy.
Navneet Iyengar
+91 22 3029 5126
Navneet.Iyengar@MotilalOswal.com
August 2010
38

Sector:
Engineering
6th Annual Global Investor Conference
KEC International
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
KECI IN
49.3
488
0.5
640 / 416
-1 / -29 / -13
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/07A
3/08A
3/09A
3/10A
20,406
28,145
34,274
39,082
1,046
1,712
1,163
1,897
20.4
32.1
34.4
36.9
112.2
57.6
7.2
7.3
24.0
15.2
14.2
13.2
9.7
5.2
4.5
3.6
48.3
44.3
33.9
30.2
35.4
32.0
28.2
26.5
1.1
1.0
0.8
0.8
8.7
8.6
7.3
7.3
Company Represented By:
Mr R D Chandak, MD
Mr Vardhan Dharkar, CFO
Mr Mayur Khetan,
IR & Corporate
Key Takeaways
Confident of strong FY11 revenue growth led by RPG Cables
KEC is confident of posting 15-20% revenue growth over two years as it had a
robust order backlog of Rs56b as on 1QFY11 with a BTB of 1.4x.
The tender pipeline is robust with orders of Rs40b-50b in various stages of bidding.
It expects PGCIL to spend about Rs110b-120b this year on grid expansion projects
and is cautious about price driven competition.
As on 1QFY11 KEC had an order backlog of Rs56b divided between South Asia
(51%) and the rest of the world (49%). Out of this, domestic orders for transmission
and distribution accounted for Rs25b (~44%) of the backlog.
EBITDA margins to be maintained at 1QFY11 levels in FY11, FY12
South Asian orders, which have a 51% share of the order book, have a built in
escalation clause, which makes the management confident of maintaining at least
10-11% EBITDA margins in FY11.
KEC had virtually no market share through FY10 when PGCIL spent about Rs43b on
transmission towers. With most of the new entrants booked with orders for the next
year, KEC maintains that competitive intensity will return to normative levels in FY11.
RPG Cables to provide incremental growth
After the consolidation with RPG Cables, KEC intends to set up a power cables
factory in Gujarat with an initial capex of Rs1b. The plant, which will start operations
by late FY12, is likely to achieve peak revenue of Rs4b-5b. This plant will be used to
make cables that can carry power at 132/220 and 400kV range and will help the
company to provide integrated substation EPC services in the near future.
Railways, the next big opportunity
In April 2010 KEC won an order worth Rs1.3b to construct station buildings, platforms,
level crossings and signaling equipment. This segment forms about 4% of KEC’s
order backlog and the management expects to make inroads into the railways
segment due to its inherent synergies with the transmission line business.
The railways plan to add 1,000km of new lines in FY11 against an average of
219km/year over the past five years. An increased thrust on the PPP model to
develop new business areas in the segments of railway lines, world class stations,
auto hubs, manufacturing units of rolling stock, logistic parks, high-speed train
corridors, port connectivity and multi-level car-parking will provide new avenues of
growth for KEC.
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Navneet Iyengar
+91 22 3029 5126
Navneet.Iyengar@MotilalOswal.com
August 2010
39

Sector:
Engineering
6th Annual Global Investor Conference
Larsen & Toubro
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
LT IN
601.8
1,807
23.6
1,951 / 1,371
-3 / 13 / 4
YEAR
END
NET SALES
(RS M)
PAT *
(RS M)
EPS*
(RS)
EPS GR.
(%)
P/E*
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
339,264
370,347
443,971
565,142
30,046
37,110
45,711
56,487
51.5
61.7
76.0
93.9
31.1
20.2
23.2
23.6
19.8
24.1
23.8
19.3
4.8
4.7
5.0
4.4
24.5
19.7
18.9
19.8
26.0
23.7
21.7
21.9
1.9
2.5
2.6
2.0
16.7
19.6
19.9
15.9
* Consolidated; EPS is fully diluted
Company Represented By:
Mr A K Mondal,
General Manager - IR
Ms Sweta Shetty, IR
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
Order intake growth guidance 25% YoY
1QFY11 order intake grew by 63% to Rs156b. Currently the order book is Rs1,078b,
implying book-to-bill ratio of 2.9x TTM revenue.
The management is confident of achieving 25% growth in FY11 including order
from Hyderabad Metro of Rs75-80b.
L&T announced a BTG order worth Rs63b from JP Associates for 3X660MW BTG
worth Rs63b. The management is confident of a strong success rate with the private
sector for more such BTG orders in future besides state and central utilities.
Factoring in 22% FY11 revenue growth; long cycle jobs impact 1QFY11 revenue
The management has maintained FY11 revenue growth guidance of 20%. Our
estimates factor in revenue growth of 22% for FY11 and 28% for FY12.
There were also some delays in financial closure of development projects (13% of
order book). The management explained that margin recognition in a project
commences after the booking of 25% of the cost of the project.
Risk management for projects in place to counter uncertainty
L&T follows a systematic risk management practice to analyze and counter project
level uncertainty. Projects up to Rs6b are referred to a risk management committee
chaired by the CFO and projects exceeding Rs10b must pass through the Chairman
at the bidding stage and for monthly progress on projects.
This committee analyses all parameters in including the case of ‘liquidated damages’
and its impact on profitability of the company. Hence L&T has a self correcting
process to smoothen execution issues.
Other key takeaways
2QFY10 revenue is expected to be lower due to the inability of projects to cross 20-
25% threshold limits depending on the timeline of execution. The management
expects the Hyderabad Metro award, amounting to Rs128b, in 2HFY11.
EPC order awards for development projects in the road sector, amount to Rs20b, as
they attain financial closure.
Indigenization levels for BTG orders will be 90% for boilers in three years and in five
years for turbines. The MHI JV has started production at its plant in Gujarat and will
book the APGenco (1,600MW) order worth Rs15b in the next two years.
Valuation and view
We value L&T based on the SOTP methodology. We value the core business at
Rs1,546/share (20x FY12E) and Rs369 for subsidiaries. We value L&T Power (BTG)
at Rs82/share (10x FY14E EPS).
Navneet Iyengar
+91 22 3029 5126
Navneet.Iyengar@MotilalOswal.com
August 2010
40

Sector:
Engineering
6th Annual Global Investor Conference
Voltas
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
VOLT IN
330.9
209
1.5
217 / 128
-1 / 19 / 34
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
EPS
YoY (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/07A 25,267
03/08A 32,029
03/09A 43,259
03/10A 48,059
2,015
2,077
2,514
3,810
5.9
6.1
7.3
11.2
174.3
3.1
21.2
52.7
35.1
34.0
28.1
18.4
0.0
0.0
0.0
0.0
48
36
32
35
38
32
25
34
2.6
2.0
1.5
1.3
68.8
25.1
23.3
13.7
Company Represented By:
Mr B N Garudachar,
GM - Communications
Mr Utsav Shah,
CFO - Central F & C Services
Key Takeaways
Confident of 15-20% revenue growth in FY11, FY12
The management is confident of 15%+ growth in the EMP segment in FY11 due to a
strong order backlog of Rs50b at the end 1QFY11, to be executed until the end of FY12.
Although conversion of orders into execution has improved, it remains sluggish in
the HVAC business. The international order book remains satisfactory at Rs35b;
with strong inflows in 4QFY10, revenue buoyancy should sustain beyond FY12.
Order-inflow has been strong in the past two quarters. In 1QFY11, new orders
grew by 77% to Rs10b. The new orders included a tunnel ventilation project for
Metro Rail in Singapore. Success in this project augurs well for Voltas as it can look
at this segment in various geographies.
In the unitary cooling product segment, the key drivers for growth are (i) healthcare,
(ii) metro-rail projects, (iii) airports, (iii) telecom, and (iv) the power sector. The
segment is expected to record strong volumes in the next few quarters, in air
conditioners and refrigerators.
With expansion in IIP with a more than 10% average growth over January-May
2010, the outlook is positive for the EPS segment. Voltas is expanding its product
portfolio especially in the material handling business, where it is the market leader
in segments like forklift trucks, container handling equipment and storage revival
systems for cargo complexes.
Other takeaways
MEED reports that more than US$2.8t of projects are planned or underway in the
GCC as on April 2010. Qatar, Saudi Arabia and the UAE are leading the recovery.
The Middle East accounts for ~60% of the order book and 37% of Voltas’ revenue.
In the Middle East, about 70% of investment has been planned for the construction
and tourism sector, which constitutes a huge market for Voltas and other EMP/HVAC
players.
In the HVAC business, global growth in demand of 6% a year is expected through
FY14. China will be the fastest growing market, outpacing the global growth. In
India, cooling equipment will continue to outpace heating equipment demand due to
rising incomes and low penetration of air conditioners in households.
The increased thrust on airport modernization and metro rail services will be future
growth drivers for Voltas.
Valuation and view
The stock trades at 22 x FY10 earnings. With 18-20% growth in core earnings likely,
Voltas is attractively priced. Success in a few large contracts in India or the Middle East
will be the key catalyst. We do not have a rating on the stock.
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Navneet Iyengar
+91 22 3029 5126
Navneet.Iyengar@MotilalOswal.com
August 2010
41

Sector:
FMCG
6th Annual Global Investor Conference
Asian Paints
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
APNT IN
95.9
2,592
5.4
2,706 / 1,296
7 / 23 / 69
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
54,632
66,809
78,224
93,283
4,014
7,720
9,160
11,305
41.8
80.5
95.5
117.9
-3.9
92.4
18.6
23.4
62.1
32.3
27.2
22.1
20.7
15.7
12.1
9.5
33.4
48.5
44.5
43.1
39.4
57.3
54.4
54.8
4.6
3.7
3.1
2.6
37.3
20.2
17.2
13.9
Company Represented By:
Mr P M Murthy, MD & CEO
Mr Jayesh Merchant, CFO & CS
Mr R J Jayamurugan,
GM, Accounts and Tax
Mr Deepak Alva, Chief Manager
- Finance and Strategy Planning
Key Takeaways
Volume growth outlook strong
Asian Paints’ volume growth outlook is strong and 1QFY11 volumes were up by 24%
YoY. Demand in North India has revived after a period of sluggish growth. This will help
to sustain volume growth.
Capex estimates at Rs3b-3.5b a year
Asian Paints is expected to incur capex of Rs3b-3.5b every year. It recently started
a unit in Rohtak with a capacity of 150,000 tons, which can be expanded to 400,000
tons a year. It is setting up another unit in Maharashtra which will start in CY12.
Plan to reduce outsourcing
Asian Paints outsources low value paints like
Utsav,
while most of the enamels and
emulsions are manufactured in-house. The ratio of outsourced paints is likely to decline
from 27% as enamels and emulsions are growing faster.
GST to benefit paint industry
GST will benefit the paint industry and other FMCG segments. Gains will be a function of
the GST rate and other taxes like octroi and entry taxes. Supply chain efficiencies will
accrue to the company.
Asian Paints expects to maintain margins
Global paint margins are usually around 10% but margins in India are higher. Even if
margins decline in the long term due to increased competition, base margins will be 14-
15%. The company expects to maintain the margins in the near term.
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Nikhil Kumar
+91 22 3029 5120
Nikhil.N@MotilalOswal.com
August 2010
42

Sector:
FMCG
6th Annual Global Investor Conference
Dabur India
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
DABUR IN
864.0
198
3.7
219 / 119
-6 / 5 / 27
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/09A 28,054
03/10A 33,657
03/11E
39,851
3,912
5,015
5,735
7,053
4.5
5.8
6.6
8.2
17.1
28.3
14.2
23.0
44.7
35.1
30.5
24.8
21.3
16.1
12.6
9.9
47.7
45.8
41.5
40.0
44.5
46.9
47.8
47.2
6.1
5.2
4.3
3.6
36.6
27.5
22.8
18.8
03/12E 46,778
Company Represented By:
Mr S Raghunathan, CFO
Ms Gagan Ahluwalia,
AGM - Corporate Affairs
Mr Dhruv Sharma,
Asst. Manger - Corporate Affairs
Key Takeaways
Volume growth strong, overall momentum sustainable
Dabur India posted 17% volume grown YoY in 1QFY11. Oral care, hair oils and health
supplements have been key growth drivers. Demand conditions look good and some
price increases are likely in coming months.
Commodity costs likely to soften from 3QFY11
Input cost pressure in 1QFY11 continues in 2QFY11, with cost inflation in honey, dextrose,
LLP, oils, packaging (35% of RM costs) and sugar. LLP prices are unlikely to soften due
to a lack of capacity, though sugar and honey prices are softening. Dabur had stocked
up mango pulp and sugar, which enabled lower pressure on margins. Dabur expects
commodity costs to fall after 2QFY11.
Hobby acquisition could open new opportunities in MENA
Dabur announced the acquisition of
Hobby,
a cosmetics brand with a manufacturing and
marketing network in Turkey. It has a topline of US$27m and was acquired for US$70m.
The company’s EBITDA margin was 17% and PAT margin, 10% WHEN???.
Hobby
has
leadership in hair gels and has products like face and body washes and baby cleaners.
Hobby
will enable Dabur to launch its own brands and products from its facilities in the
MENA region, where it will also launch
Hobby
products. Turkish brands enjoy a premium
image, so there is a strong possibility
Hobby
will succeed in the MENA region.
International business a key growth driver
The international business has been Dabur India’s key driver in the recent past, posting
high double-digit sales growth and margin expansion. Margins of international operations
are in line with those in the domestic operations. The management expects the ratio of
international operations to total sales to increase from the current 20% to 30% (it does
not rule out more acquisitions) by the time Dabur doubles its sales in FY14.
Valuation and view
Dabur is one of the steadiest performers in the FMCG space. A wide product portfolio is
an advantage and niche positioning insulates most of the portfolio from head-on
competition with MNCs. We estimate 19% PAT CAGR over FY10-12. The stock trades at
24.8x FY12E EPS of Rs8.2. Maintain
Buy.
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Nikhil Kumar
+91 22 3029 5120
Nikhil.N@MotilalOswal.com
August 2010
43

Sector:
FMCG
6th Annual Global Investor Conference
Ghari Industries
Company Represented By:
Mr Sushil Kumar Bajpai,
President-Corporate Affairs & CS
Key Takeaways
Ghari has 18% market share in a Rs100b detergent market
Ghari detergents has 18% value share in the Rs100b detergent market. The company is
present in the mass market, which is 60% of the total. It sells detergent powder and
bars under the brand
Ghari
and competes with HUL’s
Wheel, Nirma
and
Fena.
It has
strong brand equity in the northern and central parts of India with 50% market share in
UP and 40% market share in Delhi and Madhya Pradesh. It achieved market leadership
in Haryana, as well. Ghari has gained market share from small and unorganized players.
Consolidation of the unorganized sector has increased its share and economies of scale.
Ghari confident of sustaining growth, not impacted by price wars
Ghari is confident of sustaining double digit volume growth in the coming years. It
foresees no competitive threat from MNCs as it sells products on the value-for-money
platform and sees no threat from undercutting. It operates with 35% gross margin,
selling and distribution costs are 4% of sales, including adspend (2% of sales). It has
started advertising on the national platform medium and expects the adspend ratio to
increase to 3-4%.
Geographical expansion is a key growth driver
Ghari, which started in UP has been fast spreading its network in other states. The
company has been capitalizing on distribution gaps of large players to gain share. It has
3,000 dealers but its presence is weak in southern and eastern India. It does no
outsourcing and gets its products from 18 factories. It is setting up a unit in Karnataka
to make inroads into South India. It is open to acquiring mid-sized players in East India.
Ghari plans to increase presence beyond detergents
Ghari plans to increase its presence beyond detergents. It launched toilet soap under
the brand
Venus
last year and garnered sales of Rs800m. It plans to enter the toothpaste,
shampoo, floor cleaner, toilet cleaner and shaving cream markets. R&D is in progress
and first products are 1.5-2 years away. New products will be launched under new
brands.
Ghari has strong cash flows, sustainable operations
Ghari posted sales and PAT of Rs18b and Rs1.75b respectively in FY10. It posted EBITDA
margins of 14% and PAT margin of 9%. It posted sales of Rs7b in 4MFY11. It estimates
15% CAGR in sales over the next three years and strong cash flows exceeding Rs2b.
Restructuring to create a pure HPC play
Ghari set up divisions for leather, footwear and wind farms. Leather and footwear have
been hived off into a separate company. The unit posted sales and PAT of Rs800m and
Rs400m respectively in FY10. Restructuring of the company will result in making it a
pure HPC play with presence in detergents and soaps and it plans to enter the personal
care and home care categories.
Not Rated.
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Nikhil Kumar
+91 22 3029 5120
Nikhil.N@MotilalOswal.com
August 2010
44

Sector:
FMCG
6th Annual Global Investor Conference
Hindustan Unilever
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
HUVR IN
2,177.5
256
12.1
296 / 218
-9 / -2 / -28
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/09A* 167,617
03/10A
03/11E
03/12E
177,253
194,947
218,191
20,636
20,587
20,889
24,564
9.5
9.4
9.6
11.3
18.5
-0.4
1.5
17.6
27.0
27.1
26.7
22.7
27.1
21.6
19.4
16.3
119.0
79.7
72.4
71.7
122.8
105.1
95.4
95.4
2.7
3.0
2.7
2.4
17.8
19.2
19.1
15.9
* EPS for 12 months (April 08-March 09)
Company Represented By:
Mr S C Srinivasan,
VP - Treasury, M&A and IR
Key Takeaways
Target to maintain leadership in core categories
HUL will defend market share in categories like soaps, laundry, hair and skin cre.
HUL leads the market (2.5-3x its nearest competitor) in core categories and will
invest strategically (on new launches like
Brooke Bond
and
Sehatmand
and pricing
strategies) and tactically through promotions to maintain the relative advantage.
Skin, tea volumes under pressure; soaps, detergents to grow slowly
Skin care volumes under pressure, partly due to high inflation. Tea volumes declined
Due to high levels of penetration, traditional categories like soaps and detergents
are likely to post growth in mid-single digits (4-5%). But the opportunity lies in
uptrading consumers. Consumers are upgrading in the toilet soap category, from
which HUL will benefit.
FY11 margins to stay under pressure, ad-spends to stay high
Gross margins are likely to come under pressure due to fewer price increases and
rising input costs. 1QFY11 gross margins increased due to global procurement
synergies and beneficial rates locked in earlier.
Ad-spends are likely to remain high and unlikely to revert to 13.5-14% levels. But,
the 1QFY11 ad-spend of 15.4% had the impact of aggressive pursuance of volume
growth and investments behind new launches (Brooke
Bond Sehatmand, Knorr Soupy
Noodles),
which may not be sustained through the year.
HUL is investing in categories of the future
HUL is investing in emerging segments like fabric conditioner, body wash, noodles
and cooking aids, deodorant and water. HUL aims to corner 30-40% share in each
of the categories though new players are likely to enter the segments.
The new product segments are margin accretive. HUL expects 30-40bp gross margin
expansion each year as the share of new segments increases.
Pure IT posted sales of Rs3b in the previous year and is growing at 40-45%. HUL
extended the basic product to Rs1,000 Pure IT compact and premium offering in
Marvella.
The future looks bright as cartridge sales are also picking up.
Valuation and view
HUL posted two consecutive quarters of double-digit volume growth but this has
been achieved at the cost of margins as higher ad-spends eroded profitability.
Pressure on margins is likely. HUL is trying to mitigate this by efficiencies in
procurement, production, distribution and technology.
We estimate 9.5% PAT CAGR over FY10-12. The stock trades at 26.7x FY11E EPS of
Rs9.6 and 22.7x FY12E EPS of Rs11.3.
Neutral.
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Nikhil Kumar
+91 22 3029 5120
Nikhil.N@MotilalOswal.com
August 2010
45

Sector:
FMCG
6th Annual Global Investor Conference
Marico
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
MRCO IN
609.0
121
1.6
136 / 78
-8 / 7 / 27
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/09A 23,884
03/10A 26,608
03/11E
31,038
2,038
2,454
2,967
3,643
3.3
4.0
4.9
6.0
28.5
20.4
22.1
22.7
36.5
30.3
24.8
20.2
16.4
11.4
8.6
6.3
44.9
36.9
34.3
30.9
42.5
40.8
44.2
42.3
3.2
2.9
2.4
2.0
25.3
20.5
16.9
14.0
03/12E 36,914
Company Represented By:
Mr Chaitanya Deshpande,
Head M&A and IR
Mr Anubhav Rastogi, Head - IR
Key Takeaways
Parachute volume growth intact, hair oils picking up
Parachute
coconut oil maintained double-digit volume growth in 1QFY11. Marico plans
to increase prices of 100ml, 200ml and 500ml packs by 5% in a few months. But prices
of starter packs in blisters, (20ml, 40ml) will be untouched as the focus is on converting
loose oil users to branded oil.
Copra prices to rise; safflower prices benign
Copra (40% of RM) prices are up 5% and the company expects to end FY11 with a 10%
price increase. Safflower (12% of RM) prices are down 12% YoY and should be flat in
FY11. Rice bran oil (12% of RM) prices are firm and a rise is expected.
Kaya being transformed; definitive outlook after FY11
Marico has initiated steps to transform Kaya’s business model. The company posted a
loss of Rs47m in 1QFY11 and expects to end FY11 with a loss of Rs150m-200m. The
impact of restructuring initiatives will be visible 9-12 months hence.
Saffola being extended to other wellness categories
Marico is extending
Saffola
from oils to other product categories. The plan is to use the
brand for wellness products used by the consumer through the day.
Saffola Arise
is
witnessing repeat purchases, and Marico is running an attractive sales promotion scheme
for the product.
Saffola Zest
has returned to the drawing board and will be relaunched
with changes. Marico is also test marketing oats under the
Saffola
brand.
Marico to benefit from GST; tax rate to stay at 18-20% for two years
Marico expects to benefit from the introduction of GST due to lower taxes, efficiencies
in distribution and an expected increase in demand. It has commissioned two units in
Baddi and Ponta Sahib, which will result in the tax rate being 18-20% until 2012. After
that, tax rates will increase as existing units will go out of the 100% tax break.
International business margins to increase
Margins at Marico’s international business increased in Bangladesh, Egypt and the Middle
East. The South African business is growing at 20% and the Bangladesh and Middle
East businesses are growing in double digits. Marico plans to increase its presence in
the Middle East and Africa to accelerate growth in its international business.
Valuation and view
Marico is one of the best plays on the coconut oil and edible oils market in India. We
expect it to maintain steady growth in the medium term due to strong brands and the
lack of MNC competition. We estimate 22% PAT CAGR over FY10-12. The stock trades
at 24.8x FY11E EPS of Rs4.9 and 20.2x FY12E EPS of Rs6. Maintain
Buy.
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Nikhil Kumar
+91 22 3029 5120
Nikhil.N@MotilalOswal.com
August 2010
46

Sector:
FMCG
6th Annual Global Investor Conference
Radico Khaitan
Company Represented By:
Mr D K Barthiya, CFO
Mr Mukesh Agarwal,
AVP - Finance and Treasury
Key Takeaways
Liquor industry to maintain double-digit volume growth
Radico Khaitan is the second largest player in the IMFL segment with annual sales of
14.6m cases. The company expects the IMFL industry to maintain 10-11% volume CAGR
and value CAGR of 14-15%. Whisky volumes are likely to grow by 9% and rum is likely
to grow by 6%. Vodka is likely to grow by 30% CAGR over FY10-12.
ENA prices to decline in the coming season
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Nikhil Kumar
+91 22 3029 5120
Nikhil.N@MotilalOswal.com
Radico expects ENA prices to decline in the coming season due to an expected increase
in sugarcane production. Current prices rule at Rs27/liter, which it expects to decline to
Rs23/liter in the flush season.
8PM to be relaunched with new packaging
8PM,
the largest brand in its portfolio posted single-digit volume growth in FY10 after a
decline in FY09. The company cites the change of taste, due to the use of grain spirit, as
a key reason for the loss of consumer connect. The product issues have been addressed
and it will relaunch the brand in new packaging, which will enable it to regain double-
digit volume growth.
Magic Moments maintains high double-digit volume growth
Magic Moments
vodka sold 1.4m cases in FY10 and it grew by 32.6% YoY in 1QFY11.
The brand has a 25% share in the vodka market and 85% share at the Rs350 price
point. It is likely to emerge as a key profit driver as its contribution to margins is 3.5x the
contribution of
8PM
whisky.
Radico increases focus on innovation; enters premium whisky segment
Radico and Diageo are dismantling a JV they formed to develop premium whisky. The JV
suffered a loss of Rs550m. Radico increased its thrust on innovation and launched
Morpheus
brandy in the premium segment, which is selling 20,000 cases a month. It
also launched
After Dark
and
Eagle’s Dare
whisky at the premium end.
CSD sales growing at 3-4%; payment delays not seen
Radico has a strong presence in canteen store sales with a market share of 22.4%. CSD
sales have been growing at 3-4% in volumes. CSD payments are on time and the
company faces no debtor issues.
August 2010
47

Sector:
Information Technology
6th Annual Global Investor Conference
Financial Technologies
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
FTECH IN
45.9
1,226
1.2
1,722 / 1,150
-14 / -28 / -36
YEAR
END
NET SALES
(RS M)
PAT*
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
3,564
3,330
3,455
3,716
3,686
3,444
1,906
1,890
80.3
75.0
41.5
41.1
-61.4
-6.7
-44.7
-0.8
15.3
16.3
29.5
29.8
3.3
2.8
2.6
15.1
23.2
18.3
9.0
8.4
8.8
7.0
6.0
6.4
15.8
17.5
16.9
15.1
30.2
34.8
34.7
32.1
Company Represented By:
Mr Shreekant Javalgekar,
Director-Finance
Ms Mayura Kulkarni,
Asst. Manager - IR
Key Takeaways
On track to launch of 3 new exchanges; upside triggers on successful launch
Financial Technologies’ three new exchanges are expected to go live shortly – SMX
(Singapore Merchantile Exchange) in August, GBOT (Mauritius) in September and
BFX (Bahrain) in October 2010 (All 100% subsidiaries). The company could look at
strategic placement of some stake at SMX to investors if that would aid liquidity.
SMX presents a huge potential in the absence of any competing exchange. FT may
offer period of free transactions in its promotional attempts for the new exchanges.
Expects greater clarity on introduction of equity trading in MCX-SX and
transaction fees on currency trading over next few months
MCX-SX filed a writ petition in the Bombay High Court in July against market regulator
SEBI, pointing out the delay in approval for commencing operations, despite complying
with all regulatory requirements.
The Competitive Council has taken up the case of predatory pricing by NSE’s currency
exchange in not charging transaction fees. The company expects statute in this
regard ordering NSE and consequently MCX-SX to charge at least the marginal cost
of operating the exchange. FT indicated that even in case of a charge of Rs1 per
100,000 transacted, PBT of MCX-SX could be of the order of Rs1b.
Continued dominance of MCX; IPO possibility post clarity on MCX-SX issues
MCX currently enjoys over 80% market share, is the 6th largest commodity exchange
globally and undisputed number one in the Indian space. The company expects
MCX to file for an IPO post clarity on MCX-SX related issues.
It continues its strong traction with YTD turnover growth of 55% (as on 31 July
2010) and high EBITDA margin of 60%+ (including interest on float).
Licenses in technology products increasing at healthy pace, led by ODIN
ODIN is India’s leading trading solution; over 530,000 ODIN licenses sold till date
(87% market share in India). ODIN license sales grew more than 50% in FY10.
Standalone EBITDA margins in the range of 45-55%; expected to be maintained.
Valuation and view
We maintain
Buy
on FT, with an SOTP-based target price of Rs1,610. We value [1]
standalone business at 13x FY12E earnings (Rs535), [2] MCX business at 18x FY12E
earnings (Rs299), [3] MCX-SX at 30% discount to last strategic sale valuation
(Rs333), [4] NBHC at 13x FY12E earnings (Rs60) and [5] investment in group
companies at 1.5x invested capital (Rs384).
Clarity on pending issues with SEBI on launch of equity exchange, competition council
in terms of introduction of transaction fees on MCX-SX currency trading segments,
and success of new exchanges remain key triggers.
Covering Analyst(s):
Ashwin Mehta
+91 22 3982 5409
Ashwin.Mehta@MotilalOswal.com
Ashish Chopra
+91 22 3982 5424
Ashish.Chopra@MotilalOswal.com
August 2010
48

Sector:
Information Technology
6th Annual Global Investor Conference
Infosys Technologies
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
INFO IN
573.9
2,868
35.6
2,912 / 1,936
1 / 6 / 25
YEAR
END
NET SALES
(RS M)
PAT*
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A 216,930
3/10A 227,420
3/11E
3/12E
275,723
324,700
58,800
61,340
70,688
86,025
102.5
107.4
123.7
150.6
29.5
4.7
15.2
21.7
28.0
26.7
23.2
19.0
9.0
7.1
5.8
4.8
36.7
29.7
27.6
27.7
40.2
33.7
32.6
31.9
7.1
6.6
5.3
4.3
21.5
19.1
15.7
12.9
Company Represented By:
Mr Abraham Mathews, BPO - CFO
Key Takeaways
Sees no further declines in Europe; expects improvements, going forward
Infosys’ US$ revenues from Europe declined 5.5% QoQ in 1QFY11 on weakness in
UK and Switzerland, coupled with cross currency impacts. All European countries
except UK and Switzerland were stable or showing an increasing trend.
The company does not see any further decline in the geography and expressed its
confidence in growth improvement, going forward. Europe constitutes 20% of Infosys’
revenues and a turnaround in this region would augment its growth impressively
(Infosys grew 4.8% QoQ in 1QFY11, despite 5.5% decline in Europe).
No downward pressure on pricing, possibility of mix-based pricing uptick if
growth skews towards discretionary service lines
2% QoQ decline in pricing was primarily mix-based, with larger incremental revenues
emanating from lower priced services like Applications Maintenance and Testing.
Infosys sees a stable pricing environment ahead; pick-up in discretionary spending
(46% contribution from Package Implementation, Application Development, and
Products) could provide scope for mix-based pricing improvements.
Looking at growth without sacrificing margins; expresses confidence on
margin levers
Infosys ruled out further wage-hikes in FY11, post hike of 12-13% offshore and 2-
4% onsite in 1QFY11. It expects attrition to trend down over the next 2-3 quarters.
It expects stable pricing, best in class bulge mix, fixed bid scope and lowest SGA to
support its guidance of 150bp decline in EBITDA margins in FY10. Infosys saw an
EBITDA margin decline of 230bp QoQ in 1QFY11 on wage inflation and pricing decline.
It expects to participate in deal renegotiations, where it can sustain margins within
a narrow band through optimal delivery mix, bulge mix management and low SGA.
BPO – best chance of an acquisition; IT-led BPO the sustainable way forward
Infosys measures all acquisition targets against stringent NPV criteria and ability to
bring cost efficiencies. It sees the best scope for such acquisitions in BPO, where
two of its last acquisitions, Philips BPO and Mc Camish, have happened.
Infosys’ BPO practice is the smallest among the top-3 IT names; it believes IT
bundled with BPO is a superior and more sustainable offering than standalone BPO.
Valuation and view
We expect Infosys to post US$ revenue CAGR of 23.2% over FY10-12, with an
EBITDA margin moderation of 110bp over this period. It remains our preferred pick
in the top-tier IT sector due to: [1] greater discretionary delta, [2] better operational
scope, and [3] better than peer group earnings growth CAGR of 18.4% over FY10-
12. We maintain
Buy,
with a target price of Rs3,160 (21x FY12E EPS).
Covering Analyst(s):
Ashwin Mehta
+91 22 3982 5409
Ashwin.Mehta@MotilalOswal.com
Ashish Chopra
+91 22 3982 5424
Ashish.Chopra@MotilalOswal.com
August 2010
49

Sector:
Information Technology
6th Annual Global Investor Conference
Tata Consultancy Services
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
TCS IN
1,957.2
870
36.9
883 / 430
13 / 6 / 51
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A 278,129
3/10A 300,289
3/11E
3/12E
352,537
408,496
51,367
68,647
79,803
88,389
26.2
35.1
40.8
45.2
3.0
33.6
16.3
10.8
33.1
24.8
21.3
19.3
10.8
8.1
6.1
4.9
36.4
37.3
32.7
28.2
44.2
40.9
37.3
33.4
6.0
5.5
4.6
3.9
23.4
19.2
15.6
13.4
Company Represented By:
Mr S Mahalingam, CFO & ED
Mr Kedar Shirali, Director - IR
Key Takeaways
Sees broad-basing of growth with growth dependence on BFSI reducing
BFSI led the growth for TCS over the past four quarters, driven by M&A integration,
cost take-outs and discretionary spending. But TCS sees other verticals also starting
to contribute, with strong traction in Telecom (+10.8% QoQ), Retail (+7.4% QoQ)
and Energy & Utilities (17% QoQ). BFSI contributes ~45% of TCS’ revenues.
The management expects BFSI to continue growing and Manufacturing, which was
flat in 1QFY11, to see improvement. On the BPO front, TCS sees IT+BPO emerging
as a winning proposition, given weakness in standalone BPO environment.
Measures non-linearity more stringently; sees improvements going ahead
TCS measures non-linearity more stringently, with business generated from models,
which do not require headcount only as non-linear revenues. Current proportions
are of the order of 5% (excluding products).
It includes the following categories in non-linear space: [1] business models
intrinsically non-linear like platforms, [2] SMB (cloud computing initiative); [3] products
business (3.5-4% at present), and [4] government projects using Digigov framework.
Return of discretionary spend and improving growth indicate possibility of
pricing uptick towards end of FY11
The company has till now not seen any pricing renegotiations, but believes if demand
strength continues into the next calendar year, pricing could see an uptick. Till then
it sees stability in pricing.
TCS expressed confidence in the discretionary spending environment, which has
contributed to a significant proportion of its BFSI growth. The company also has a
positive outlook on Manufacturing, a vertical which will drive discretionary demand.
Limited scope of utilization, offshoring or fixed bid improvement; non-employee
costs remain the key margin lever
TCS improved its EBITDA margin by 310bp over the last 5 quarters, on 370bp
reduction in SGA as a percentage of sales. It used levers like utilization, offshoring
and fixed bid progression but sees limited scope for using these levers, going forward.
It sees following margin levers to help sustain profitability: [1] non-employee costs
to stay at the same absolute levels, [2] improvement in the execution/productivity
of existing FPP projects, and [3] improvement in the performance of subsidiaries.
Valuation and view
We expect TCS to post US$ revenue CAGR of 20% over FY10-12, with largely stable
EBITDA margins and an EPS growth of 13.4% over this period. We maintain
Neutral
on the stock, with a target price of Rs845 (19x FY12E EPS).
Covering Analyst(s):
Ashwin Mehta
+91 22 3982 5409
Ashwin.Mehta@MotilalOswal.com
Ashish Chopra
+91 22 3982 5424
Ashish.Chopra@MotilalOswal.com
August 2010
50

Sector:
Information Technology
6th Annual Global Investor Conference
Wipro
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
WPRO IN
2,443.3
429
22.7
452 / 292
7 / -3 / 33
YEAR
END
NET SALES
(RS M)
PAT*
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A 256,891
3/10A 271,957
3/11E
3/12E
316,775
367,142
38,677
45,638
53,265
58,611
15.9
18.6
21.7
23.9
22.1
17.4
16.7
10.0
27.0
23.0
19.7
17.9
7.1
5.3
4.2
3.5
28.0
26.6
24.0
21.5
23.2
21.8
20.6
19.8
4.0
3.7
3.1
2.5
19.9
16.9
14.3
12.1
Company Represented By:
Mr Girish Paranjpe, Joint CEO
Mr Rajendra Shreemal,
VP & Corporate Treasurer
Key Takeaways
Expects healthy demand for outsourcing irrespective of global IT spend growth
Wipro expects strong and sustainable growth in outsourcing, given the aging of
population in the developed world. ~77m people will be retiring over the next 10
years and some proportion of these would be IT workers.
The disruptive nature of new technologies and fast-paced change is driving
managements to outsource technology-based non-core responsibilities and focus
on core businesses. The management believes that a shift from insourcing to
outsourcing will result in greater demand.
More confident on Europe compared to peers; focus on account mining
Wipro has expressed higher confidence on turnaround in Europe than its top-tier
peers. It enjoys local leadership in Germany and France, and is positive on France
on institutionalized IT industry v/s predominance of in-house operations in Germany.
Depreciation of the Euro has improved the export attractiveness of these countries
and has benefited the region’s private companies.
Wipro has increased focus on account mining; hired 2-3 dozen engagement
managers, 50 client partners and sales persons from the top 5-10 IT firms.
IMS to drive growth, with 1/4th of the pipeline; TMT not to remain a drag
IMS constitutes nearly 1/4
th
of Wipro’s present deal pipeline; and is likely to lead
growth. Deal pipeline has shown a 5-6% increase over the last year. IMS contributed
21% revenues in FY10 and Wipro is the largest player in this service line.
There is positive traction in TMT; the segment is expected to emerge out of a
sluggish phase and register effective growth.
Focus on earnings growth ahead of peers through margin management and
strategic hiring
Wipro’s impressive operating performance is an outcome of effective cost
management rather than any realizations from premium pricing, implying margin
sustainability. It intends to continue effective cost management, with utilization being
measured from an absolute bench perspective, rather than percentage and hiring
continuing to be JIT. It sees no impact of supply-side pressure in demand fulfillment.
Wipro sees improvement in elevated attrition scenario over the next 2-3 quarters. It
expects RSU’s and promotions for >20,000 people, coupled with employee
engagement initiatives to lead to moderation in attrition.
Valuation and view
We expect Wipro to post US$ revenue CAGR of 19% and EPS CAGR of 13% over
FY10-12. Maintain
Neutral,
with a target price of Rs455 (19x FY12E EPS).
Covering Analyst(s):
Ashwin Mehta
+91 22 3982 5409
Ashwin.Mehta@MotilalOswal.com
Ashish Chopra
+91 22 3982 5424
Ashish.Chopra@MotilalOswal.com
August 2010
51

Sector:
Infrastructure
6th Annual Global Investor Conference
C&C Constructions
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
CCON IN
23.4
242
0.1
284 / 149
-3 / -13 / 29
YEAR
END
NET SALES*
(RS M)
PAT*
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
06/06A
06/07A
06/08A
06/09A
2,117
3,304
5,333
7,501
309
332
409
411
16.9
18.2
22.4
22.5
7.3
23.3
0.5
14.3
13.3
10.8
10.8
0.2
0.1
0.1
0.1
29
12
13
12
15
8
7
4
2.4
1.4
1.1
1.2
8.6
6.4
6.5
6.0
Company Represented By:
Mr Gurjeet Singh Johar,
Chairman
Mr Tapash Majumdar, CFO
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
Road sector will remain the core segment
C&C Constructions is promoted by a group of five professionals having vast experience
in the construction industry. The company was listed in 2007.
C&C derives bulk of its growth from the Road segment (over 60% of order book).
Other sectors where it has presence are Civil (25%), Railways (10%), Water,
Transmission Towers, etc.
The company also has one toll road in Punjab under BSC-C&C Kurali Toll Road
Limited, in which it has 49% stake.
Order book at Rs37b, 4x TTM sales; encouraging outlook for FY11
The company has an order book of Rs37b. A large part of the order book (40%) is
concentrated in the state of Bihar. Concerns have been raised about risks associated
with execution of these projects due to law and order problem in Bihar. The
management claims that the situation there has improved and projects are
progressing as expected.
Other key projects that the company is executing are three road projects in UP,
including Yamuna Expressway and six parking lots in Delhi for Commonwealth Games.
Afghanistan also has been a key region for the company in the past. Over the past
few years though, its exposure to Afghanistan has significantly reduced to just about
10% of the current order book. Afghan Parliament work order is the main job that
it is doing in Afghanistan.
Over Rs15b worth of new orders targeted
The company aims at bagging orders worth Rs15b in FY11.
To obtain larger orders that require technical and financial pre-qualifications beyond
the capacity of C&C, it has entered into several JVs. Its main JV partners include B
Seenaiah and Company Projects (BSC) and MS Sukhmani Engineers. C&C has plans
to bid for projects in JV with Spanish company, Isolux Corsan in verticals where it
lacks expertise, or where project size is large.
Valuation and view
C&C has posted a CAGR of 35% in sales and 8% in profit over FY05-09 (year ending
June). It enjoys high margins of 18-20% due to presence in difficult regions like
Bihar and Afghanistan. Profit remained stagnant in FY09 due to fall in margins even
as sales grew well.
For 9MFY10, the company's sales grew 33% to Rs7.7b, while profit grew 67% to
Rs360m. EBITDA margin was 24% as against 18% in the previous year.
C&C has good growth outlook, comfortable DER at 1.34x and RoCE of around 20%.
The stock trades at reasonable valuations. We do not have a rating on the stock.
Navneet Iyengar
+91 22 3029 5126
Navneet.Iyengar@MotilalOswal.com
August 2010
52

Sector:
Infrastructure
6th Annual Global Investor Conference
Era Infra Engineering
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
ERIE IN
195.0
221
0.9
235 / 140
2 / -3 / 23
YEAR
END
NET SALES*
(RS M)
PAT*
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/08A
3/09A
3/10E
3/11E
14,645
23,769
33,656
41,960
1,014
1,522
2,075
2,562
8.8
10.6
10.6
13.1
7.9
20.7
0.3
23.5
25.3
21.0
20.9
16.9
5.2
3.6
3.0
2.6
25.5
22.2
19.9
17.7
14.4
14.4
14.5
15.6
2.4
2.0
1.9
1.6
11.6
11.6
9.2
7.6
Company Represented By:
Mr Joy Saxena, Group CFO
Mr Rakesh Kumar,
Senior Manager – Finance
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
Strong order-book of Rs107b; 3x TTM sales
Era Infra Engineering (EIL) has expertise in segments including Power, Highways,
Railways, Airports, Urban Infrastructure, Refineries, Industrial Complexes,
Commercial and Office Buildings, and Residential Complexes. It has a national
presence, with a track record of robust execution capability. EIL has five BOT projects.
The company has three business lines - EPC (construction business), BOT and
Equipment Management and Concrete (EMC).
Composition of the EPC order-book stands as: Infra Projects - 51%, Industrial and
Social - 28%, and Power - 21%.
Public sector accounts for 88% of the company's order book. With more private
sector participation in power, share of private sector will increase. However,
government orders will continue to be large part of its order book.
EIL's experience in executing BOP orders in large thermal power plant project has
made it a preferred contractor for BHEL and NTPC. About 70% of the power order
book is government orders.
Increasing BOT portfolio
EIL has three BOT projects - Gwalior Bypass, Western Haryana and Hyderabad Ring
Road - expected to be operational by CY10. Total project cost is about Rs13.4b. EIL
has won two more projects in the BOT segment - Muzaffar / Haridwar section for
Rs10b, and Haridwar / Dehradun section for Rs6.5b. Total equity requirement is
Rs4b-4.5b over the next three years.
Its equipment rental business is on a strong footing; EIL is a leading player in this
segment. This augurs well for the construction business, with optimal asset utilization.
Other key takeaways
EIL aims to become a full-fledged infrastructure-EPC company. It aims at increasing
the ticket size of projects from the government sector.
It plans partnerships with strong global names to foray into the international market.
Valuation and view
EIL is among the fastest growing construction companies in India. In the last four
years, its sales and net profit have grown at a CAGR of 82% and 79%, respectively.
Its margins are among the highest in the construction industry at 18-20%. This is on
account of the company's focus on high-value contracting and equipment rental
business. EPC enjoys 13-15% margins, while rental business has 45-50% margins.
Given its strong order book, the company should maintain high growth in the next
two years. We do not have a rating on the stock.
Navneet Iyengar
+91 22 3029 5126
Navneet.Iyengar@MotilalOswal.com
August 2010
53

Sector:
Infrastructure
6th Annual Global Investor Conference
GMR Infrastructure
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
GMRI IN
3,667.4
58
4.6
77 / 51
-8 / -7 / -34
YEAR
END
NET SALES*
(RS M)
PAT*
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
40,192
45,665
50,520
65,950
2,795
1,584
4,264
11,228
0.8
0.4
1.2
3.1
-34.0
-43.3
169.2
163.3
74.8
132.0
50.7
19.3
3.2
3.1
3.1
2.7
4.3
2.4
6.1
14.1
3.4
3.1
6.6
9.6
7.1
8.3
6.8
5.3
26.6
27.7
14.0
9.5
Company Represented By:
Mr Jitendra Jain, CFO - Treasury
Mr Gaurang Vasani,
AGM - Strategic Finance
Ms Bhairvi Lotia, Strategic Fin
Key Takeaways
Equity funding for projects under construction largely in place
GMR Infrastructure has raised Rs28b (GMR Energy: Rs13.6b through PE; GMR:
Rs14b through QIP), which will enable it to meet large part of the equity funding
requirements for projects under development (5.5GW of power projects and three
road projects).
Also, GMR has completed the refinancing of US$837m acquisition debt for InterGen,
with two years moratorium, through US$737m debt (LIBOR+425bp) and US$100m
equity contribution. Thus, there is no immediate requirement on InterGen.
Project progress encouraging: clearances secured, construction on
GMR Infrastructure has completed financial closure of its recently-awarded 3-road
project (cumulative project cost of ~Rs48b) at interest rates of 10.5-10.75%.
It has secured clearances (land, water, MoEF, fuel) and awarded equipment for
5.5GW of thermal projects under development.
The Ministry of Power has recently placed GMR's 768MW Vemagiri expansion (part
of 5.5GW under development projects) in the priority list to obtain gas from KG-D6
Stake divestment in InterGen, Airport Holdco
GMR has expressed its interest to divest its 50% holding in InterGen to enable it to
focus on the growing opportunities in the domestic business.
GMR has cash and equivalents of Rs55b as of June 2010, of which Rs40b is available
for equity investment in various project SPVs (balance in operational SPVs). The
management has stated that GMR is well placed to fund its equity infusion, and is
not looking at any dilution at parent level in near term. It is, however, exploring the
option to divest stake in Airport Holdco to unlock value.
Valuation and view
We expect GMR to post a PAT of Rs4.2b in FY11 and Rs4.9b in FY12, with EPS CAGR
of 77% over FY10-FY12. The stock trades at 53x FY11E and 45x FY12E earnings.
GMR Infra: SOTP Valuation
Business Segment
Airports
Power
Roads
Cash
Intergen
Others
Total
Equity Value
148,099
62,661
5,800
37,936
8,500
3,150
266,147
In %
56
24
2
14
3
1
100
Rs/share
40
17
2
10
2
1
73
Covering Analyst(s):
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Nalin Bhatt
+91 22 3982 5429
NalinBhatt@MotilalOswal.com
August 2010
54

Sector:
Infrastructure
6th Annual Global Investor Conference
Hindustan Construction
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
HCC IN
303.3
142
0.9
162 / 100
16 / -5 / 8
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
33,137
36,442
42,476
54,103
843
1,044
1,336
1,939
3.3
3.4
4.4
6.4
19.0
4.6
28.0
45.2
19.4
40.4
31.6
21.8
1.6
2.3
2.2
2.1
8.4
8.3
7.8
9.8
12.0
9.0
9.2
11.0
1.1
1.6
1.6
1.2
8.6
13.3
12.6
9.8
Company Represented By:
Mr Shiv Mutto, AVP - IR
Mr Ishan Pateria, Accounts &
Finance Investor Relations
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
Rs20b IPO for Lavasa in the next six months
HCC’s board has cleared IPO plans for Lavasa. The tentative issue size will be
Rs20b and the funds will be used mainly to retire debt of about Rs8b at the end
1QFY11 and to fast track construction of the second and third townships.
The management stated that the first town, Dasve, was completed with most of the
residential apartments/villas sold out. Phase-I, comprising the development plan of
three towns Dasve, Mugaon and Bhoini will be completed by FY13 and FY14. At the
end of 1QFY11, Lavasa had employed capital of Rs25b with debt of Rs8b and customer
advances through bookings of Rs6b. Money collected through pre-booking of residential
sales cumulatively amounted to Rs13b at the end of 1QFY11.
BOT portfolio to have equity commitment of Rs4.4b by end of FY12
HCC has a BOT road portfolio of six NHAI projects totaling Rs55b. HCC intends to
grow the portfolio to Rs150b in 2-3 years. The equity commitment until FY12 will be
about Rs4.4b. The equity invested so far is Rs2.8b and the rest, of Rs1.6b, will be
invested in 12-18 months. The equity commitment on the overall BOT portfolio is
Rs8b.
Order backlog of Rs193b
HCC derives ~90% of its order book from the state/central government. The order
book at the end of 1QFY11 was Rs193b (up 26% YoY, up 3% QoQ), book-to-bill ratio
was 5.1x TTM revenue.
We believe the current order book should drive revenue CAGR of 22% over FY10-
12. Order intake in 1QFY11 was Rs15b. Major orders received in the quarter are (i)
the Rajasthan atomic power project unit 7&8, Rs8.8b, and (ii) Sainj HEP, Rs4.3b.
HCC is also L1 in projects totaling Rs20b, out of which hydro power projects account
for almost Rs13b. The management has guided for FY11 inflows of Rs80b-100b,
which translates into inflow growth of 40-70%.
Valaution and view
We have a price target of Rs145, comprising: core business Rs96/sh (PER 15xFY12E),
Lavasa Rs52/sh (20% discount to NPV), IT parks Rs4/sh and BOTs, SRA, KSAG Rs10/sh,
less FCCB outstanding (Rs18/sh). We expect revenue and PAT CAGR of 22% and 36%
over FY10-12 with margins holding steady at 12.6% for two years. Maintain
Buy.
Navneet Iyengar
+91 22 3029 5126
Navneet.Iyengar@MotilalOswal.com
August 2010
55

Sector:
Infrastructure
6th Annual Global Investor Conference
MBL Infrastructure
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
MBL IN
17.5
257
0.1
269 / 180
-
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/08A
3/09A
3/10A
2,940
5,136
6,370
156
274
370
13.8
22.9
26.0
53.3
65.6
13.5
29.8
16.9
12.5
NA
NA
1.4
10.5
15.9
11.0
10.8
86.9
14.5
NA
NA
0.8
NA
NA
6.2
Company Represented By:
Mr Anjanee Kumar Lakhotia,
CEO & Whole Time Director
Mr R. N. Bansal, VP (F&A)
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
MBL management continues to present an upbeat outlook for the company, both for
FY11 and FY12.
Robust PAT guidance
The management has guided for FY11 PAT of Rs600 -630m and FY12 PAT of Rs900m.
The above guidance implies 55-60% reported PAT CAGR over FY10-12.
Healthy Order Book
As on date, MBL has a healthy order book of Rs22,357m (2.2x of FY11E revenue) of
which Rs18,189m of contracts will be executed solely by MBL and Rs4,169m through
joint ventures (MBL's share being Rs 2,870m in the joint ventures). Out of the total
share of contracts of Rs21,059m, the unexecuted portion is Rs16,000m.
Continue to enhance its project execution capabilities
MBL has developed a reputation for undertaking challenging infrastructure and
construction projects and completing such projects in timely manner. MBL intend to
continuously strengthen is execution capabilities by adding to its existing pool of
engineers, attracting new graduates, and facilitating continuous learning with in-
house and external training opportunities.
Navneet Iyengar
+91 22 3029 5126
Navneet.Iyengar@MotilalOswal.com
August 2010
56

Sector:
Infrastructure
6th Annual Global Investor Conference
Nagarjuna Construction
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
NJCC IN
256.6
175
1.0
197 / 119
-11 / -3 / 1
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS*
EPS
P/E*
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
47,002
57,120
69,987
86,667
1,788
2,370
3,003
3,678
7.0
9.2
11.7
14.3
-1.4
32.5
26.7
22.5
24.0
18.1
14.3
11.7
1.3
1.6
1.8
1.6
9.4
9.8
10.4
12.1
10.2
12.7
11.5
12.8
0.9
1.1
1.2
1.0
10.1
11.2
11.2
9.4
* For construction segment (consolidated, including international business)
Company Represented By:
Mr Y.D. Murthy,
Executive Vice President - Fin.
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
Consolidated FY11 revenue growth guidance of 24%
For FY11, management guided for consolidated revenue of Rs73b (up 24% YoY):
standalone revenue Rs58b (up 21% YoY), international construction revenue Rs11.5b
(up 5% YoY) and real estate/BOT project revenue Rs3.8b (up 210% YoY).
Order intake guidance excluding the in-house power project BTG (1,320MW) order
of Rs50b stays at Rs100bfor FY11. This includes roads Rs20b, buildings Rs35b,
water Rs15b, etc.
Expect 20-30bp EBITDA margin expansion in FY11
NCC is likely to expand its FY11 EBITDA margins by 20-30bp to 10.3-10.4%. This
will be driven by: (1) fixed price contracts contributing 35% to the order book for
NCC and thus the company will benefit from decline in commodity prices, (2) favorable
change in the order book resulting in an increase in relatively high-margin buildings
and water (now contributing 50% of the order book, up from 35% in FY08) and a
decline in transport (at 4% now from 15.3% in FY08).
In FY10, the share of roads in revenue declined to 11% from 19% in FY09, which
also helped margins, and we expect this percentage to decline further in FY11.
Cumulative investments in RE/BOT projects Rs11.8b including advances
NCC has so far invested Rs11.8b in real estate and road BOT projects (including
advances of Rs2.4b). The outstanding equity commitment was Rs450m-500m,
including cost overruns on road projects, of which a large part will be invested.
Most of the road BOT projects under construction are expected to become operational
by December 2010, which should improve NCC’s operational cash flows. The
Bangalore elevated road project was commissioned and toll collection commenced
in February 2010. There has been a 12-18 month delay in commissioning of most
projects.
The 1,320MW power project, to be set up by NCC, has been facing protests from
local groups in Andhra Pradesh. The Environment clearance has been cancelled.
NCC has capped further equity investments in real estate; it plans to recover
investments made as the market improves.
Valuation and view
NCC is our top pick in the construction space.
Maintain
Buy
with a target price of Rs204 (core business at Rs160/share, 12x
FY12E and BOT/RE investments at Rs44/share).
Navneet Iyengar
+91 22 3029 5126
Navneet.Iyengar@MotilalOswal.com
August 2010
57

Sector:
Infrastructure
6th Annual Global Investor Conference
Simplex Infrastructure
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
SINF IN
49.5
485
0.5
563 / 343
-1 / 2 / 15
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
46,627
44,538
53,675
67,764
1,318
1,226
1,698
2,251
26.6
24.8
34.3
45.5
29.1
-7.0
38.5
32.6
11.2
17.9
14.0
10.5
1.6
2.2
2.0
1.7
15.9
12.8
15.6
17.7
16.7
13.4
15.6
18.2
0.6
0.7
0.6
0.5
6.6
7.0
6.3
5.4
Company Represented By:
Mr N K Kakani,
Executive Director
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
Management guidance of FY11 revenue growth of 15-20%
The management stated that FY11 revenue growth would increase 15-20%. This
compares with revenue de-growth of 5% in FY10. FY10 margins were up 80bp, a
reflection of increased focus on picking and choosing orders. Improved FY11 revenue
growth will lead to better fixed cost absorption.
The management expects future growth to come from segments like Power T&D,
mainly transmission line towers, due to the company’s inherent strengths in piling
work, which enables Simplex to qualify for jobs at the state level. Simplex is executing
jobs worth Rs2b in power transmission for MSEB (Maharashtra) and Gujarat SEB.
After this, it will automatically qualify for PGCIL jobs.
Initial traction in order intake, June 2010 order book Rs115b
Simplex’s order book at the end of June 2010 was Rs115b (up 14% from the end of
June 2009 and up 8% from the end of December 2009).
The order book was largely stagnant at Rs100b-105b from 1QFY09 to 3QFY10.
Order intake in 4QFY10 was Rs21.4b (up 86% YoY, up 76% QoQ), driven by improved
intake in the domestic market. In FY10, thermal power contributed to 37% of the
intake and buildings (largely residential) to 25%. This is also positive for margins
and the working capital cycle, given that a large part of private sector projects are
on a negotiated basis (and not on L1).
The bid pipeline stands at Rs390b mainly divided into (i) thermal (35%), ii) industry
and construction (24%), (iii) building (14%), (iv) marine (6%), (v) 5% each for
bridges and piling, urban infrastructure, and 1% of railways expected to be converted
into inflows over 12-18 months.
Other takeaways
4QFY10 EBITDA margins were up 220bp YoY (at 10.5%) despite revenue slowdown
making for poor fixed cost absorption. The management indicated that margins on
the existing order book were 10.5%+, and incremental orders were at similar margins.
The financial closure of the Rs12b BOT road project (four laning of 67km of road
between Chennai and Kolkata) in 3-4 months after which the EPC work on the
stretch will start. Simplex owns 34% stake in the project, followed by SREI-Infra
(40%) and Gulfar (26%).
Valuation and view
We expect FY11 EPS at Rs34.3 (up 39%) and FY12 EPS of Rs45.5 (up 33%). At CMP, the
stock trades at a PER of 14x FY11E and 10.5x FY12E. Maintain
Buy
with a price target of
Rs569 (based on 12x FY12E earnings).
Navneet Iyengar
+91 22 3029 5126
Navneet.Iyengar@MotilalOswal.com
August 2010
58

Sector:
Media
6th Annual Global Investor Conference
DB Corp
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
DBCL IN
181.5
248
1.0
275 / 207
-
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/07A
3/08A
3/09A
3/10A
6,653
8,506
9,490
10,505
553
759
477
1,828
3.3
4.5
2.8
10.6
59.2
37.2
-37.1
275.3
75.6
55.1
87.7
23.4
25.1
19.0
16.2
6.9
33.2
34.5
18.5
28.2
12.7
23.9
12.2
28.3
6.9
5.3
5.0
4.6
54.0
26.4
34.9
14.5
Company Represented By:
Mr Aneil Mahajan,
COO - Corporate Affairs
Ms Jhelum Datta,
Manager - Investor Relations
Mr Prasoon Pandey,
Head - Investor Relations
Key Takeaways
Penetration levels have upside; DB will continue to expand existing markets
DB Corp is primarily engaged in the printing and publication of newspapers in three
languages (Hindi, Gujarati and English) across 11 states. It is the number-1 or
number-2 player in all its existing markets.
DB believes there is enough scope for increasing the newspaper penetration in its
markets. It will continue to expand its distribution reach in semi-urban and rural
markets.
Increased readership and circulation will consolidate DB’s lead in existing markets.
Innovative launch strategy has enabled success in new markets
DB has announced its entry into Bihar, Jharkhand and Jammu. It would be launching
Ranchi and Jammu editions by the end of August, followed by Jamshedpur and
Dhanbad editions within CY10.
From a one-state (Madhya Pradesh) player, it has expanded to 11 states over the
last 15 years, enabling a ~4x increase in readership to ~15.8m (2
nd
highest in
India).
DB has an excellent track record of entering new markets with a greenfield strategy
and attaining a leadership position. It expects to continue its success with the
forthcoming Jharkhand/Bihar launch.
National advertisers are ramping up print ad spends
Advertising contributes ~80% of revenues for the company. Of this, ~60% comes
from local advertisers and ~40% from corporate/national advertisers.
DB has witnessed increased traction from national advertisers (especially FMCG
companies) over the past 1-2 quarters.
Current margins are unsustainable given higher newsprint costs, increased
investments
Newsprint costs have been on an uptrend during CY10. While DB benefited from low
newsprint cost in FY10 (~US$500/ton), its newsprint cost is likely to increase from
~US$540/ton in 1HFY11 to US$560-570/ton in 2HFY11.
Current margin levels (38% EBITDA margin in 1QFY11) seem unsustainable given
increased investments in expansion of existing markets, entry into new markets
(Jharkhand, Jammu) and increased newsprint costs. The company expects to
maintain FY11 EBITDA margin at FY10 level (31.5%).
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
August 2010
59

Sector:
Media
6th Annual Global Investor Conference
Network 18 Media and Investments
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
NETM IN
114.3
142
0.4
172 / 65
-13 / 28 / 20
Key Takeaways
Subscription revenue ramp-up would be key
NW18 group’s managed revenue (not factoring the ownership) has grown at 83%
CAGR over FY05-10 to ~US$470m.
Subscription revenue constitutes only 12% of revenue for NW18 v/s an estimated
36-38% for Star/Sony and ~45% for Zee.
Post restructuring, “new TV18” would have annual advertising revenue of ~Rs12b
on a managed basis (v/s ~Rs15b for Zee and Zee News combined).
However, current subscription revenue of ~Rs1.2b is only ~11% of the subscription
revenue generated by the Zee group.
Distribution tie-up with Sun (Sun 18), international expansion to drive
subscription income
The recent JV of NW18 group with Sun (Sun 18) will have 33 channels (NW18: 10,
Sun Network: 20, Disney: 3) and would be India’s highest GRP-delivering bouquet.
International subscription revenue will ramp-up over next 2-3 years.
The management mentioned that “new TV18” is profitable at the EBITDA level
despite significantly low subscription revenue and incremental subscription revenue
will flow-through straight to the bottomline.
Ad revenue to grow at 15-20%; opex increase to remain moderate
Advertising revenue is expected to grow by 15-20% in FY11.
Pick-up in advertising revenues is visible across sectors including FMCG, autos,
financials, etc.
Carriage fee in news is trending downwards due to lower competitive intensity and
likely reduced bargaining power of analog cable due to ramp-up in DTH subscriber
base.
Company Represented By:
Mr Raghav Bahl,
Founder and Group MD
Mr Sarbvir Singh,
Head-Investments
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
August 2010
60

Sector:
Media
6th Annual Global Investor Conference
Zee Entertainment
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
Z IN
484.1
300
3.1
326 / 174
-2 / 6 / 34
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
21,773
21,966
28,591
33,219
4,365
4,686
5,804
7,474
10.1
10.5
12.0
15.4
14.8
4.3
14.2
28.8
29.8
28.6
25.0
19.4
3.9
3.8
3.5
3.2
13.9
12.9
14.4
17.0
18.2
17.8
21.1
24.6
6.1
6.3
4.8
4.1
24.3
22.9
16.4
12.7
Company Represented By:
Mr Punit Goenka, CEO
Mr Atul Das, President
Key Takeaways
Industry on a strong footing
Digitization will be a significant revenue driver, going forward. Trends indicate that
DTH subscriber base can increase to ~70m in the next four years v/s ~23m currently.
Share of television in advertising revenues is likely to increase from current levels
of 40-42%.
Industry ad revenues are likely to grow 14-15% in FY11.
Potential sunset clause on analog broadcasting would be a positive.
Sports business continues to be a loss making proposition for the industry. Turnaround
is likely only post increased digitization when subscription revenue becomes a
meaningful contributor. Digitization will enable broadcasters to charge a premium
for sports properties and monetize fair value of sports content.
Regional markets will continue to grow at a faster pace, given lower penetration of
broadcasting (v/s print) in these markets.
Zee is ideally placed, with a diversified channel portfolio
Zee leads the industry in profitability metrics. The management intends to maintain
a disciplined investment philosophy, with focus on returns and profitability.
The company aims at maintaining its leadership and being a number-1 or number-
2 player across its operating genres, including regional channels.
It is looking at niche genres like cookery, golf and kids channels to further enhance
its addressable market.
Zee expects to maintain or increase EBITDA margin from the FY10 level of ~28%.
However, it would be investing more in content to consolidate its position.
It is platform agnostic and has more than 90,000 hours of digitized content that can
be used for new media opportunities likely to emerge post 3G/BWA rollouts.
Other highlights
Lack of profitability in sports genre remains a challenge.
Regulatory developments mandating digitization are a big trigger for the industry.
However, we believe that implementation and adherence to the proposed timelines
remain uncertain.
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
August 2010
61

Sector:
Metals
6th Annual Global Investor Conference
Hindalco
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
HNDL IN
1,962.8
165
7.0
188 / 99
10 / 1 / 31
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A 656,252
3/10A 607,221
3/11E
3/12E
637,058
649,709
4,853
17,455
23,605
31,657
2.8
8.8
12.0
16.1
-83.1
217.1
36.7
34.1
59.7
18.8
13.8
10.3
3.8
2.5
2.5
2.0
6.4
13.1
18.1
19.9
-0.1
8.1
7.9
8.3
0.8
0.9
0.8
0.9
17.1
7.5
7.6
6.6
Consolidated
Company Represented By:
Mr Sagar Dhamorikar, AVP
Mr Saket Sah,
Corporate Finance and IR
Key Takeaways
Novelis: restructuring, better pricing power aid turnaround
Restructuring during the crisis period, expiry of price ceiling contracts and re-pricing
of conversion premiums has helped Novelis to perform better in the last few quarters.
The management expects the superior performance to continue for the next few
quarters. Novelis has a rich product mix, with leadership in the flat rolled product
(FRP) industry.
Novelis is investing in few of the fastest growing FRP markets such as South America
and India, which will become its volume drivers in the longer term. The FRP market
is expected to grow at 5-6% in the next five years. Novelis will be incurring a capex
of US$300m in South America to build a new cold mill, to invest in finishing equipment
and ancillary improvements. The expansion is likely to be completed in 2012.
The recently closed FRP plant at Rogerstone, UK is being relocated to Hirakud,
Orissa at a capex of Rs8.5b (US$185m). The plant is likely to be commissioned by
2012. It will have initial capacity of 150,000tpa, which will be expanded further to
285,000tpa by FY15. This plant will produce high value added beverage can products.
Focus on domestic greenfield expansion - low cost, high margins
Existing primary aluminum capacity of 545ktpa is fully integrated, with captive power
plant (CPP) capacity of 1,219MW and alumina refinery capacity of 1.5mtpa.
Post successfully turning Novelis around in FY10, Hindalco has shifted its focus on
high yielding domestic greenfield projects. Hindalco has lined up an investment of
Rs400b over the next few years to increase its integrated aluminum smelting capacity
3x to 1.7mtpa, with facilities such as alumina (3x to 4.5mtpa) and CPP (3.5x to
4,200MW).
Valuation and view
We believe that Hindalco's domestic aluminum expansion is on a fast track, as the
management is keen to achieve the benefits of the entire value chain of the aluminum
business after acquiring Novelis.
The Utkal Project has achieved financial closure; project visibility has improved
tremendously after initial delays. We expect aluminum production to grow at a
CAGR of 21% and alumina production to grow at a CAGR of 28% over FY10-14.
The stock trades at 10.3x FY12E EPS and an EV of 6.6x FY12E EBITDA. We expect
the stock to get re-rated, as projects get delivered as per schedule. Maintain
Buy.
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Tushar Chaudhari
+91 22 3982 5425
Tushar.Chaudhari@MotilalOswal.com
August 2010
62

Sector:
Metals
6th Annual Global Investor Conference
Jindal Steel and Power
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
JSP IN
928.2
620
12.5
786 / 443
-4 / -14 / 11
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/07A
3/08A
35,198
54,890
7,050
14,377
31,906
36,429
7.6
15.5
34.4
38.6
22.6
103.9
121.9
12.3
81.6
40.0
18.0
16.1
22.5
15.3
8.2
5.4
27.6
38.3
45.3
33.9
12.6
16.8
27.4
23.3
17.9
11.6
6.0
5.8
45.0
27.0
12.2
11.1
3/09A 108,510
3/10A 113,629
Consolidated
Company Represented By:
Mr Rajeev Aggarwal, Sr. V P Fin.
Mr Rajeev Jain, Sr. DGM Finance
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Key Takeaways
Jindal Steel standalone (JSPL)
Existing steel capacity of 3mtpa integrated steel plant at Raigarh includes 1.4mtpa
sponge iron, 1.7mtpa pig iron plant and a captive power plant (CPP). 340MW from
CPP is produced from waste gases of sponge iron & coke oven and middling's of
coal washing.
Post commissioning of 5mtpa pellet plant in February 2010 at Barbil, the lump
requirement of the company has fallen to 1mtpa from 4mtpa earlier. Iron ore fines
will be sourced from existing mines. Conversion cost is approximately Rs1,000/ton.
JSPL is investing Rs220b at its Greenfield projects in Angul and Jharkhand to add
capacities of 1.6mtpa and 3mtpa respectively. Steel production will increase 3x to
6m tons and surplus power will rise to ~1140MW over FY10-14E.
Capex of Rs120b is planned to set up 810MW of CPP and 1.6mtpa of Steel making
through coal gasification-sponge iron route at Angul. Plate mill of 1.6mtpa will be
commissioned in 2011. Coal linkages have been granted for 810MW CPP. Coal mines
should be ready by 2011 end.
Capex of Rs100b is planned to set up 3mtpa (4000m3 BF) steel capacity (at Jharkhand,
through BOF route) by December 2012.
Steel production is expected to ramp up to 2.5m tons and 3m tons respectively for
FY11 and FY12.
Recently acquired 1.5mtpa HBI facilities at Oman at US$525m, which is expected to
get commissioned by end FY11. The acquisition brings 20 year agreement for gas
supply from Government at US$1/ton.
Jindal Power (JPL)
Company's 1,000MW unit is operational with own coal mine (5.5mtpa capacity; just
7km away from plant) having ~200m tons reserves. The landed cost post washing
of coal for the company is Rs550-600/ton, which keeps the cost of power generation
lowest.
JPL is implementing capex of Rs240b to expand thermal power capacity by 4380MW
during FY12-14E.
JPL has already received 50% coal linkage for its 2400MW power project at Tamnar,
equipment orders have been placed with BHEL in December 2008. Management
sounded positive on to resolving the current issue surrounding "no go" zone.
Management expects to complete the project on time (by June 2012).
1,350MW power project:
First unit of 135MW at Raigarh (out of 4*135MW) is
under stabilization and rest are expected to get commissioned by March 2011. Rest
six units of 135MW each are expected to get commissioned at Angul within a gap of
2-3 months starting from November, 2010.
Tushar Chaudhari
+91 22 3982 5425
Tushar.Chaudhari@MotilalOswal.com
August 2010
63

Sector:
Metals
6th Annual Global Investor Conference
JSW Steel
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
JSTL IN
252.2
1,113
6.1
1350 / 648
4 / -4 / 38
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A 159,348
3/10A 189,572
3/11E
3/12E
227,022
316,490
10,174
11,117
13,437
31,058
54.4
59.4
60.2
123.1
-31.8
9.3
1.3
104.5
20.5
18.7
18.5
9.0
2.8
2.3
1.6
1.3
13.5
12.4
8.7
14.7
7.7
10.1
7.4
15.2
2.3
2.0
1.8
1.1
12.5
9.1
9.2
4.2
Consolidated
Company Represented By:
Mr Rajesh Asher, Head - IR
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Key Takeaways
Prices stabilizing; initial signs of supply correction visible
Global steel prices have started stabilizing in the last few weeks; there are initial
signs of correction in supply.
Domestic steel consumption is growing at 12% and is likely to grow at 10-12% over
the next three years.
In China, pressure of rampant dumping is subsiding, as it has recently removed the
rebates on exports and is shutting down capacities. China's steel production has
declined from 1.79mt/day to 1.64mt/day.
Greater raw material integration; product mix to improve
JSW's iron ore mine in Karnataka is expecting second stage of forest clearance. It is
likely to produce 2m tons in FY12. Approval to allot three more iron ore mines is
pending with the central government.
With the acquisition of a coking coal mine in USA, prospects of higher integration of
raw materials are increasing. In FY12, JSW expects 1.5m tons of iron ore and
coking coal from its mines in Chile and USA, respectively.
With current capacity of 7.8mtpa, flat to longs product mix is 68:32; over FY12 the
proportion of flats is expected to increase to 77%.
JSW-JFE deal: to help retain leverage at 1.1x while fueling next phase of growth
The management sounded positive on the JFE deal, as JSW will get (1) access to
cutting edge technologies, (2) access to the fast growing automotive market, (3)
opportunity to de-leverage its balance sheet to fuel the next phase of growth, (4)
ability to shorten the learning curve to lower cost of production by achieving
operational excellence from JFE.
With increasing equity contribution, JSW will reduce debt and expects to keep the
leveraging ratio at 1.1x.
Post completion of ongoing expansion at Vijaynagar, JSW will focus on its West
Bengal project (if it does not get mines in Karnataka), as it has already received
allotment of coking coal, iron ore and thermal coal mines.
Valuation and view
We believe that JSW Steel is the most aggressive in growing volumes, has the
lowest conversion costs, and draws strategic advantage due to proximity to iron ore
mines. The recent acquisition of coal mines in USA is likely to help achieve greater
raw material integration in the coming years.
The stock trades at EV/EBITDA of 9x FY12E and 4.2x FY12E. Though valuations
appear rich on FY11 estimates, the stock remains attractive on FY12 estimates.
Maintain
Buy.
Tushar Chaudhari
+91 22 3982 5425
Tushar.Chaudhari@MotilalOswal.com
August 2010
64

Sector:
Metals
6th Annual Global Investor Conference
Sterlite Industries
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
STLT IN
3,361.6
178
13.0
232 / 137
7 / -18 / -9
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A 211,442
3/10A 244,103
3/11E
3/12E
301,055
331,382
34,847
40,407
53,712
75,688
24.6
24.0
16.0
22.5
-19.9
-2.2
-33.5
40.9
7.2
7.4
11.1
7.9
1.0
0.8
1.4
1.2
13.6
10.9
12.9
15.7
9.8
9.5
10.4
13.9
2.1
2.6
2.1
1.8
13.1
13.9
10.3
6.1
Consolidated
Company Represented By:
Mr M S Mehta, CEO,
Vedanta Resources, Plc
Mr Ashwin Bajaj and Sheetal
Khanduja, Investor Relations
Key Takeaways
Zinc: expect strong volume growth and margin expansion
Zinc capacity has expanded to 869ktpa in FY10, which will drive the production of
refined metal. Silver production will grow 3x to 16m ounces by FY13. Earnings are
likely to be driven by volume growth in zinc and margin expansion due to silver
business.
Future growth in zinc business is expected come through Gamsberg and Gergarub
(of Anglo American assets), given the company's proven track record to execute
projects at benchmark costs and timelines.
Aluminum: expansion on track, but no visibility on bauxite mines yet
Balco is implementing a capex of US$1.8b to expand its aluminum and power
capacities, which are likely to be commissioned by 2QFY12.
VAL is implementing a 1.75mtpa aluminum smelter along with captive power plants
at Jharsuguda. Phase-1 of 250ktpa capacity has been running at full capacity.
However, there is still no improvement in visibility of bauxite mines, which will drag
production growth and margins of aluminum.
On the positive side, aluminum per capita consumption in India is likely to increase
at 9.6% CAGR over the next five years, the fastest in the world, to 1.7kg by 2014,
which will still be much lower than the global average of 7.3kg.
Energy: new revenue stream; in advanced stage of commissioning
Power is likely to deliver a major boost to EPS in FY12, as Sterlite Energy is likely to
commission its 2,400MW power plant by 1HFY12. The first unit of 600MW commercial
power plant is in advanced stage of commissioning.
We believe VAL's production ramp-up will be gradual because of delays in bauxite
mining and Sterlite Energy may not sell much power to VAL. Its 1,215MW CPP is
fully commissioned and more than sufficient to feed its phase-I smelter of 500ktpa.
VAL is currently selling ~200MW surplus power to the state board. VAL has planned
to set its own CPP for feeding phase-2 aluminum expansions.
Valuation and view
We continue to believe that Sterlite Industries will outperform its peers in the long term,
with 1mtpa zinc and lead capacity, 2.4mtpa aluminum smelting capacity and over
6,000MW power capacity. Our SOTP-based valuation of Rs238 implies an upside of
35% from current levels. We reiterate
Buy.
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Tushar Chaudhari
+91 22 3982 5425
Tushar.Chaudhari@MotilalOswal.com
August 2010
65

Sector:
Metals
6th Annual Global Investor Conference
Tata Steel
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
TATA IN
887.4
541
10.4
737 / 409
10 / -19 / -1
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A 1,473,293
3/10A 1,023,931
3/11E
3/12E
1,145,399
1,143,679
90,454
-8,255
56,569
59,965
101.9
-9.3
63.7
67.6
16.9
-n/a-
-n/a-
6.0
5.3
-58.2
8.5
8.0
4.1
5.7
2.8
2.2
76.7
-9.7
33.2
27.3
15.3
4.5
9.6
9.4
0.7
0.9
0.8
0.8
5.4
11.7
7.3
6.8
Consolidated
Company Represented By:
Mr Pravin Sood,
Head (IR - India & Asia)
Key Takeaways
Tata Steel Europe: reduction in fixed costs, lower imports helping local
companies
The share of steel imports in total consumption has fallen in Europe, as currency
depreciation (EUR) restricted imports. Corus has achieved sustainable fixed cost reduction
of GBP280m on the back of various restructuring activities. Staff strength has fallen
from 42,000 to ~35,000 at the end of FY10. The company expects EBITDA of ~US$100/
ton in 1QFY11 as against our expectation of US$132/ton.
Tata Steel India: strong demand to continue, steel prices to decline 5-8%
QoQ in 2QFY11
Domestic steel demand is expected to grow 12-14% to 72m tons in CY10. The
company expects its sales volumes to grow at a CAGR of 5-6% over FY10-12.
Tata Steel expects domestic steel prices to decline 5-8% QoQ on the back of higher
supply and seasonal factors. However, it expects to deliver better performance in
terms of profitability in FY11.
Consolidated debt has declined, brownfield expansion on track
Tata Steel's gross consolidated debt has declined from US$13.3b to US$11.8b in
FY10. Tata Steel Europe has repaid US$970m, while the Indian unit has repaid
US$380m of debt. The company has repaid US$1.1b in 4QFY10 itself. Net debt at
the group level remains at US$9.8b.
Ongoing expansion of capacity to 10mtpa at Jamshedpur is scheduled for
commissioning by December 2011.
Valuation and view
At Corus, the outlook for 2HFY11 remains challenging due to falling steel prices and
higher raw material costs. Indian operations continue to perform better although there
will be pressure on margins. In our FY11 estimates, we have factored EBITDA of US$1.9b
for Indian operations and US$1b for subsidiaries (including Corus). The stock is trading
at an EV of 6.8x FY12E EBITDA. Maintain
Neutral.
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Tushar Chaudhari
+91 22 3982 5425
Tushar.Chaudhari@MotilalOswal.com
August 2010
66

Sector:
Oil & Gas
6th Annual Global Investor Conference
BPCL
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
BPCL IN
361.5
648
5.1
718 / 488
-7 / -1 / 18
YEAR
END
NET SALES ADJ.PAT ADJ.EPS
(RS B)
(RS B)
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/09A
03/10A
03/11E
03/12E
1,366
1,238
1,451
1,358
6.3
16.3
22.1
23.0
17.5
45.2
61.2
63.5
-58.1
157.6
35.5
3.7
37.1
14.4
10.6
10.2
0.0
1.6
1.5
1.3
4.8
11.8
14.6
13.8
5.9
3.9
8.2
9.3
0.0
0.4
0.3
0.3
0.0
15.8
8.4
6.9
* Consolidated
Company Represented By:
Mr S.K. Joshi, Director (Finance)
Mr Rajoo Natekar (GM, Treasury)
Key Takeaways
Diesel to be fully deregulated soon
The Government has in-principle deregulated diesel prices and the Bharat Petroleum
(BPCL) management expects complete diesel deregulation to take place soon. In 1QFY11,
a third of the subsidy burden was shared by upstream companies (ONGC, OIL and
GAIL). Though, in 1QFY11 government did not share any subsidy, BPCL expects that the
sharing will come in subsequent quarters as it did in previous years. BPCL believes that
in FY11, OMCs may bear a maximum of 15% of under-recoveries.
Sees FY11 industry underrecoveries at Rs510b
BPCL expects FY11 underrecoveries for all three OMCs (HPCL, BPCL and IOC), to be
Rs510b (auto fuels: Rs140b and cooking fuels: Rs370b) assuming the current crude oil
price for rest of the years Current underrecoveries are estimated at Rs2/ltr for diesel,
Rs13/ltr for PDS kerosene and Rs230/cylinder for domestic LPG.
Kochi expansion completed, Bina refinery commissioned
BPCL upgraded its Mumbai and Kochi refineries to produce Euro III/IV auto fuel and
expanded capacity at Kochi to 9.5mmtpa. The Bina refinery (6mmt) was commissioned
with key value upgrading units like FCC and delayed coker being commissioned and full
throughput can be expected in 2HFY11. When Bina is fully operational BPCL will be
almost self-sufficient in fuel requirement.
E&P portfolio to add value over the longer term
Of its 25 blocks, the most promising are in Brazil and Mozambique which have recorded
discoveries. BPCL expects to give incremental information on the Brazil block in terms of
reserve numbers in the next few quarters.
Valuation and view
For FY11 and FY12 we assume an oil price of US$75/bbl and build OMCs’ share in
underrecoveries at 11%. We estimate BPCL’s EPS at Rs60.5 in FY11 and Rs64.6 in FY12.
At a CMP of Rs644, BPCL quotes at a PE of 10.8x FY11E and P/BV of 1.5x FY11E.
Maintain
Buy.
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Milind Bafna
+91 22 3982 5445
Milind.Bafna@MotilalOswal.com
August 2010
67

Sector:
Oil & Gas
6th Annual Global Investor Conference
Cairn India
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
CAIR IN
1,894.4
343
14.1
348 / 230
12 / 21 / 29
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/09A
03/10A
03/11E
03/12E
14,326
16,230
83,801
133,479
8,082
10,511
46,418
83,358
4.3
5.5
24.5
43.9
N.M.
30.1
341.6
79.6
80.7
62.1
14.1
7.8
2.0
1.9
1.7
1.5
2.6
3.2
13.0
20.5
2.5
2.5
14.8
23.3
44.4
40.8
7.8
4.6
68.4
67.5
9.2
5.2
* Consolidated
Company Represented By:
Mr Anurag Mantri,
Group Financial Controller
Mr Suniti Bhat,
GM - Reservoir Development
Key Takeaways
Rajasthan production ramp-up to continue
Crude production from the Rajasthan block started in August 2009 and in 10 months
ramped-up to over 100kbpd. Sales through the pipeline started in June 2010 and the
management maintained its production guidance of 125kbpd in 2HCY10 and 175kbpd in
2012. Peak production from the field is expected to be 240kbpd.
Key activities in Rajasthan block near completion
Cairn commissioned its second and third train in June 2010. The Barmer to Bhogat
pipeline has been commissioned until Salaya and crude delivery through the pipeline
has started. Allied facilities like the Raageshwari gas terminal, Thumbli water field and
the captive power plant at the MPT field are also being commissioned. Train 4 and the
Salaya to Bhogat pipeline section is expected to be commissioned in CY11 after which
company will be able to ramp-up to more than 200kbpd. Crude delivery through only
pipeline will cut transport costs by US$6/bbl v/s trucking.
Update on exploration activities
Cairn has 11 blocks, of which three are producing (Ravva, Cambay and Rajasthan) and
eight are exploration blocks (five operated and three non-operated). It drilled three
wells in its operated KG onland block and further drilling is expected in coming quarters.
It has completed 3D seismic at its blocks in the Palar basin in India and the Mannar
basin in Sri Lanka and plans a three-well drilling program in each block in 2011.
Valuation and view
We model long term Brent crude price of US$75/bbl in our estimates and take a discount
of 12.5% (~US$9/bbl) for quality and customs duty on crude at 2.5%. Our SOTP-based
price target is Rs314. At long term Brent of US$80/bbl (current levels), our SOTP value
would increase to Rs330. Maintain
Buy.
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Milind Bafna
+91 22 3982 5445
Milind.Bafna@MotilalOswal.com
August 2010
68

Sector:
Oil & Gas
6th Annual Global Investor Conference
HPCL
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
HPCL IN
339.0
438
3.2
496 / 293
-12 / 12 / 7
YEAR
END
NET SALES ADJ.PAT ADJ.EPS
(RS M)
(RS M)
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/09A
03/10A
03/11E
03/12E
1,246,943
4,355
12.8
38.4
40.0
41.2
-40.0
198.8
4.1
3.1
34.1
11.4
11.0
10.6
1.4
1.3
1.2
1.1
4.1
11.7
11.3
10.8
8.8
8.7
8.5
9.1
0.2
0.2
0.2
0.2
8.4
10.1
7.7
6.7
1,092,084 13,014
1,194,714 13,546
1,150,350 13,962
Company Represented By:
Mr B Mukherjee,
Director (Finance)
Mr K V Rao,
ED (Corporate Finance)
Key Takeaways
Expects OMC subsidy burden to be based on ability to absorb
HPCL expects, OMCs to bear 0 to 17% of the underrecoveries as indicated by the
government. It believes the subsidy burden on the company will not be based on a
percentage of total underrecoveries but will be a certain absolute amount that can be
absorbed by the companies. In 1QFY11, one third of the total underrecoveries was
shared by upstream companies (ONGC, OIL and GAIL).
Mumbai refinery shift to Ratnagiri on cards, DFR to be prepared
The management indicated it received 1,500 acres of land (for Rs1.2b) in Ranagiri
district near Chiploon and is expecting 500 acres more soon. A detailed feasibility report
(DFR) is yet to be prepared for shifting the refinery. The refinery will be of 9mmtpa and
roughly make US$4/bbl premium over the Singapore GRM.
Bhatinda refinery mechanical completion target April 2011
HPCL’s 9mmtpa Bhatinda refinery (Rs189b), which is a JV with Mittal Energy Investments,
has achieved 85% physical progress and mechanical completion is targeted in April
2011, with products slated to flow by June 2011. The company believes the capacity of
the Bhatinda refinery can be doubled in lesser time from the present 9mmtpa. Pipeline
infrastructure is not a constraint.
CGD plans in West Bengal
The HPCL management indicated it would enter a CGD business in West Bengal where
it has signed a JV (74% stake) with the WB government to develop a network in Kolkata
and eventually other cities in the state. The management also said the CGD plan would
be authorized by PNGRB in due course.
Key projects to be complete in one year
HPCL is in the final phase of completing major projects like (1) a Rs10b LOBS upgrade
at Mumbai, and (2) a Rs9b new FCCU in Mumbai. Other ongoing projects are (1) a
Rs6.5b single point mooring (SPM) facility at Visakhapatnam, where it has obtained
environmental clearance, 2) Rs69b worth of diesel hydro-treaters in Mumbai and
Visakhapatnam (by September 2011), and (3) Rs7.5b relocation of the Visakhapatnam
terminal (March 2011).
Valuation and view
We assume an oil price of US$75/bbl in FY11. We build OMCs’ share in underrecoveries
at 11%. We estimate HPCL’s EPS at Rs40 in FY11 and Rs41.2 in FY12. At a CMP of
Rs436, HPCL quotes at a PE of 10.9x FY11E and P/BV of 1.1x FY11E. Maintain
Buy.
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Milind Bafna
+91 22 3982 5445
Milind.Bafna@MotilalOswal.com
August 2010
69

Sector:
Oil & Gas
6th Annual Global Investor Conference
Indian Oil Corporation
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
IOCL IN
2,406.3
359
18.7
418 / 268
-15 / 1 / 17
YEAR
END
NET SALES ADJ.PAT ADJ. EPS
(RS B)
(RS B)
(RS)
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
GROWTH (%)
SALES EBITDA
03/09A
03/10A
03/11E
03/12E
2,861
2,501
2,695
2,262
26.0
107.1
84.8
103.3
10.9
44.5
35.2
42.9
-67.1
308.4
-20.9
21.8
32.9
8.1
10.2
8.4
1.9
1.5
1.5
1.3
5.8
21.8
15.4
17.0
8.2
16.1
14.3
18.0
0.5
0.5
0.4
0.5
17.6
9.4
7.2
5.4
Consolidated
Company Represented By:
Mr S V Narasimhan,
Director (Finance)
Mr A K Sharma,
GM (Finance) - Treasury
Key Takeaways
Looking for clarity on diesel deregulation
The government has in-principle deregulated diesel prices but clarity is yet to emerge
on timelines. The IOC management expects clarity on complete diesel deregulation
over the coming quarters. Although in 1QFY11 the government did not share subsidy,
the company expects it to come in subsequent quarters. IOC believes that in FY11,
OMCs may bear a maximum of 15% of underrecoveries.
Pipeline profits give profit sustainability, petchem to contribute more
Compared to other OMCs, IOC’s profitability is protected to some extent by its income
from the pipeline business and income from investments. IOC commissioned a 0.9mmtpa
naphtha cracker in April 2010 and at 100% utilization it can incrementally contribute
Rs34b to its petchem EBITDA.
Panipat expansion to be complete by October 2010, other projects on track
IOC is in the final phase of completing major projects in coming quarters like (1) an
Rs11b Panipat refinery expansion from 12 to 15mmtpa (by October 2010), (2) a Rs70b
residue upgrade and MS/HSD quality improvement project in Gujarat (by October 2010),
(3) a Rs21b MS quality upgrade project in Barauni, Guwahati and Digboi (by September
2010), and (4)a Rs17b DHDT in Bongaigaon (by September 2010), and 5)a Rs17.9b
product pipeline from Paradip (by September 2012).
Paradip refinery to be complete by FY13
IOC is constructing a 15mmtpa grassroots refinery at Paradip in Orissa at an estimated
cost of Rs298b. This will be the most modern refinery in India with nil-residue production,
meeting stringent specifications. IOC has taken over 3,344 acres of land for the project
and expects the refinery to be commissioned in FY13.
Valuation and view
We assume oil price of US$75/bbl in FY11. We build OMCs’ share in underrecoveries at
11%. We estimate IOC’s EPS of Rs35.2 in FY11 and Rs42.9 in FY12. At a CMP of Rs373,
IOC quotes at a PE of 10.6x FY11E and P/BV of 1.6x FY11E. Maintain
Buy.
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Milind Bafna
+91 22 3982 5445
Milind.Bafna@MotilalOswal.com
August 2010
70

Sector:
Oil & Gas
6th Annual Global Investor Conference
ONGC
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
ONGC IN
2,138.9
1,264
58.5
1346 / 997
-8 / -1 / -4
YEAR
END
NET SALES
(RS B)
PAT
(RS B)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/09A
03/10A
03/11E
03/12E
1,046
1,018
1,177
1,252
198
194
247
288
92.5
90.7
115.3
134.6
-0.4
-2.0
27.1
16.7
13.6
13.9
11.0
9.4
3.0
2.6
2.3
2.0
23.4
20.0
22.4
22.8
22.7
19.4
21.7
22.0
2.4
2.4
2.0
1.8
5.8
5.5
4.4
3.9
Consolidated
Company Represented By:
Mr B L Ghasolia,
(Advisor, Finance)
Mr Sanjiv Kumar,
(Chief Manager, F&A)
Mr L. Nelson, (Manager, F&A)
Key Takeaways
Clarity expected on subsidy-sharing policy
ONGC indicated that the government intended to deregulate diesel prices soon. In 1QFY11
upstream shared a third of underrecoveries, of which ONGC shared 80%. It indicated
that upstream sharing would be limited to this ratio and expects rationalisation on the
subsidy sharing.
ONGC production maintained vis-a-vis decline in non-OPEC global fields:
ONGC’s oil and gas production has been maintained against a non-OPEC production
decline of 9.4% in the past nine years (2000-08). ONGC’s investment in IOR/EOR and
redevelopment projects to arrest the production decline has been over Rs300b. The
cumulative production through IOR/EOR has been 8mmt.
IOR/EOR, NELP, OVL to provide long term production growth
ONGC expects production to be subdued in the short term and that long term growth
will come from monetization of investments in IOR/EOR, NELP and OVL. Crude oil
production will increase from 24.9mmt to 28mmt in FY13 and gas production will increase
from 63mmscmd in FY10 to over 72mmscmd in FY13 and over 100mmscmd in FY16.
ONGC to make two medium term field developments
The first development is the hub development for east-coast discoveries: ONGC will
adopt the hub development for its east-coast discoveries (G-4-6, GS-29-1, G-4-5, KG-
DWN-98/2, and IB) in three phases. ONGC filed a declaration of commerciality (DoC) for
the northern discovery area on 16 July 2010. Development capex is expected to be
US$5b, with oil production to start in 2012 and gas in 2015. Recoverable reserves of
gas are estimated at 87bcm and of oil at 4.5mmt. Peak production from the block is
likely to be 35mmscmd of gas and 16.8kbpd by FY16. The second development is the
Daman offshore development: After the fast track development of the B-12 and C-24
fields in this area, production is likely to reach 10-15mmscmd.
Valuation and view
We assume oil price of US$75/bbl in FY11. We build upstream (ONGC, OIL and GAIL)
share at a third of underrecoveries in our estimates. We estimate ONGC’s EPS at Rs115
in FY11 and Rs135 in FY12. At a CMP of Rs1,277, ONGC quotes at a PE of 10.9x FY11E
EV/EBITDA of 4.4.
Buy.
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Milind Bafna
+91 22 3982 5445
Milind.Bafna@MotilalOswal.com
August 2010
71

Sector:
Oil & Gas
6th Annual Global Investor Conference
Oil India
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
OINL IN
240.5
1,393
7.3
1,558 / 1,019
-
YEAR
END
NET SALES
(RS B)
PAT
(RS B)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/07A
03/08A
03/09A
03/10A
54,765
61,185
72,007
80,728
16,400
17,889
21,617
26,105
68.2
74.4
89.9
113.8
9.1
20.8
26.6
20.4
18.7
15.5
12.2
4.2
3.6
2.4
720.1
24.3
25.0
22.5
5,068.6
33.9
39.3
30.8
0.0
4.4
3.4
3.1
0.5
10.3
7.7
6.4
Company Represented By:
Mr N Bhalla,
ED (Corporate Finance)
Key Takeaways
Oil production restored; steady oil, gas production growth expected
Oil India’s daily production dropped nearly 30% due to a shutdown at the Numaligarh
refinery. But after the restarting of the refinery the company restored production to pre-
shutdown levels of ~73kbpd. The management expects oil and gas production growth
of 3% and 7% respectively over 3-4 years.
Likely to announce acquisition in near term
OIL India’s cash reserves of Rs103b are two-third of its balance sheet size. The
management indicated it was working on foreign acquisitions and it would make an
announcement soon. OIL, a predominant onland player, is trying to diversify into the
offshore space, which is evident from its acquisition of offshore blocks in NELP rounds.
Healthy oil/gas reserve ratio, NELP acreage to provide upside
Crude oil accounts for 60% of OIL India’s 957mmboe 2P reserves. Its 1P reserves are
55% of its 2P reserves against 78% for ONGC, indicating larger scope for an increase in
1P reserves. Oil India has an impressive reserve replacement ratio (RRR) of over 1.5x
over the past few years. Its finding cost is US$4.2/bbl and lifting cost is US$6-7/bbl.
Subsidy rationalization to reduce underrecoveries for OIL
OIL India indicated that the government intended to deregulate diesel very soon. In
1QFY11 upstream shared a third of the underrecoveries, of which the company shared
11%. The company indicated that the upstream sharing would be limited to this ratio.
Valuation and view
We expect Oil India to benefit from the likely subsidy rationalization, due to which we
are positive on the stock. We assume oil price of US$75/bbl in FY11. We build the
upstream (ONGC, OIL and GAIL) share at a third of total underrecoveries. At a CMP of
Rs1,394, OIL India quotes at PE of 13.5x FY10 EPS of Rs103.6 and EV/EBITDA of Rs7.6
Buy.
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Milind Bafna
+91 22 3982 5445
Milind.Bafna@MotilalOswal.com
August 2010
72

Sector:
Oil & Gas
6th Annual Global Investor Conference
Reliance Industries
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range
1, 6, 12 Rel Per
RIL IN
3,286.2
1,016
71.5
1,185 / 841
-2 / -5 / -15
YEAR
END
NET SALES
(RS B)
PAT
(RS B)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/09A
03/10A
03/11E
03/12E
1,418
1,925
2,292
2,232
153
162
200
224
52.6
49.6
60.9
68.1
19.3
20.5
16.7
14.9
57.6
54.8
67.3
75.2
17.6
18.5
15.1
13.5
2.1
2.2
1.9
1.9
15.7
13.4
14.5
14.2
12.5
11.3
13.1
13.2
15.1
12.5
9.5
8.6
All adjusted per share info and valuation ratios are adjusted for treasury shares held by the company
Company Represented By:
Mr Robinder Singh,
Vice President (IR)
Mr Hemen Modi,
GM (Investor Relations)
Key Takeaways
Refinery utilization 100%, complexity to help GRM outperformance
Reliance
Industries (RIL) believes its refinery utilization will be above 100% considering the huge
domestic demand for petro products and due to its cost advantage. The management
expects higher complexity will help to sustain margins.
Clarity on diesel deregulation soon, keen to boost domestic marketing
RIL operates 667 fuel retail outlets. The management indicated it was keen to expand
its presence in the marketing business, once there is clarity on policy decisions relating
to diesel deregulation. In a deregulated scenario, RIL expects to get at least 10mmt of
domestic retail fuel volume share.
Petchem margins subdued but RIL believes will ride down cycle
The company indicated that ~5mmt of ethylene capacity was likely to come on stream
in CY10. These capacities, operating at very low ethylene cash cost will hamper overall
operating rates and impact margins of South Asian and European crackers. The company
feels that due to the huge domestic demand it will not have a threat of volume cuts, but
may witness margin pressure. The management also indicated it was pursuing a mega-
cracker and PX-PTA plan in Jamnagar.
Large investments will ensure next growth cycle
The management believes its investments in the broadband wireless access (BWA)
business, shale gas JVs in the US, domestic mega-cracker and PX-PTA plant will lead its
next growth phase. The investment in shale gas assets in the US is in line with its
agenda of diversification across global assets.
Valuation and view
Recently, RIL indicated that KG-D6 gas production was unlikely to increase for 6-12
months, as it would need to study the reservoir for its sustainability. We model average
gas production of 60mmscmd for FY11 and 75mmscmd in FY12, well-head gas price of
US$4.2/mmbtu. We continue to factor in a tax holiday on KG-D6 gas profits. We build
GRM of US$7.6/bbl in FY11 and US$8.5/bbl in FY12. At a CMP of Rs1,000, RIL quotes at
a PER of 15.1 FY11E of 67.3 and EV/EBITDA of 9.5.
Neutral.
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Milind Bafna
+91 22 3982 5445
Milind.Bafna@MotilalOswal.com
August 2010
73

Sector:
Pharmaceuticals
6th Annual Global Investor Conference
Biocon
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
BIOS IN
200.0
318
1.4
335 / 210
-4 / 7 / 23
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/09A 16,087
03/10A 23,678
03/11E
28,476
930
2,932
3,393
4,055
4.7
14.7
17.0
20.3
-79.3
215.2
15.7
19.5
68.4
21.7
18.7
15.7
4.2
3.6
3.1
2.7
6.2
16.7
16.8
17.4
6.2
15.6
17.0
17.5
4.0
2.7
2.2
1.8
20.1
13.4
10.9
9.4
03/12E 32,728
Company Represented By:
Mr Murali Krishnan,
President - Group Finance
Mr Chinappa, CFO - Syngene
Ms Jill Deviprasad, IR
Key Takeaways
Insulin initiatives to be a major growth driver. Biogenerics in emerging markets,
regulated markets to lead growth
Insulin a key growth driver
Biocon expects insulin (13% of revenue) to be a key growth driver in the medium to long
term. The company expects insulin to contribute 25-30% to total revenue over 3-4
years. Short to medium term growth in this segment will be driven by formulation sales
in India and emerging markets. The company sells its products in ~25 emerging markets
and has registered products in total 40-45 markets. Biocon expects to commence Phase
III clinical trials for biosimilar insulin in 2QFY11.
Contract research - changing focus
Biocon’s management is attempting to change its contract research focus to deliver
value-added integrated drug development services instead of existing FTE-based services.
This will impact profitability in the short term. But the management thinks the new
business model will help Biocon garner and retain new customers.
Axicorp to post good growth, profits to be low
The management indicated good growth for Axicorp, led by better sourcing and cost
management. But the growth will slow from 3QFY11 due to 10% mandatory price cuts.
The profitability of the business will be low with EBITDA margins of 6-7%.
Statins contribution to decline
The management indicated short-term growth in this segment would be driven by
Atvorastatin gong generic. Although Atorvastatin is a large opportunity, competition will
be much stiffer. Revenue from Simvastatin will fall gradually.
Domestic formulations gain traction
Biocon’s domestic formulation business will continue to grow at 25-30% CAGR over 2-3
years led by a ramp-up in the high growth lifestyle segment and increasing filed force
strength. While Biocon did not disclose the profitability of this business separately, we
believe it will continue to be under pressure due to increasing spends on branding and
promotion, expansion of its field force and other ramp-up initiatives.
Valuations and view
Key growth drivers for FY11 will be: (1) traction in Biocon’s insulin initiative, (2) ramp-
up in the contract research business, and 3) incremental contribution from immuno-
suppressants and API supplies. But higher R&D costs, increased depreciation and higher
expenses linked to the scale-up of the domestic formulations business will continue to
temper earnings growth. We estimate EPS of Rs17 for FY11 (up 15.7%) and Rs20.3 for
FY12 (up 19.5%) leading to 17% earnings CAGR over FY10-12. The stock is valued at
18.9x FY11E and 15.8x FY12E EPS.
Buy
with a target price of Rs345 (17x FY12E EPS).
Covering Analyst(s):
Nimish Desai
+91 22 3982 5406
NimishDesai@MotilalOswal.com
Amit Shah
+91 22 3982 5423
Amit.Shah@MotilalOswal.com
August 2010
74

Sector:
Pharmaceuticals
6th Annual Global Investor Conference
Dr Reddy’s Laboratories
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
DRRD IN
168.4
1,376
5.0
1,515 / 696
-8 / 6 / 54
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
ADJ.P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/10A
03/11E
03/11E*
03/12E
03/12E*
68,179
72,567
78,018
82,571
88,512
334
8,217
10,606
10,010
12,231
2.0
48.7
63.0
59.3
72.6
21.8
15.3
668.0
27.2
21.4
22.3
18.6
5.4
5.3
4.5
2.5
18.6
19.6
2.6
16.5
19.4
3.4
3.3
2.9
20.5
21.4
18.1
* Includes one-off upsides. Adj P/E for core est is adjusted for DCF value of FTFs & bonus debentures
Company Represented By:
Mr Umang Vohra, CFO
Mr Kedar Upadhye,
Director - Corporate Finance
Mr Raghavender R,
Deputy Manager - IR
Key Takeaways
Targets US$3b revenues by FY13 with 25% RoCE, strong growth in the US,
India, emerging markets to be key drivers
Aims to be a tier-I player in the US:
Dr Reddy's Laboratories (DRL) aims to
upgrade itself to tier-I player in US and post revenue of US$1b in the US by FY13 vs
US$350m in FY10 (an implied CAGR of 42%). New launches, comprising normal,
low-competition and patent challenge products, will help it to achieve this goal.
Low-competition opportunities in the US gaining strength:
DRL's
management has been guiding for the launch of at least one patent challenge/low-
competition product in the US every year for the next few years. Overall, DRL has a
pipeline of 12 FTFs targeting innovator market size of ~US$9b. Visible opportunities
include
Omeprazole
OTC, generic
Lotrel & Prograf
(all launched) and potential
launches of generic
Allegra D-24
(after a court verdict),
Arixtra
(US FDA approval
awaited) and
Accolate
(after expiry of a 30-month stay in December 2010).
Traction in emerging markets to sustain:
DRL is expanding its portfolio for
these markets through its own products, in-licensed products and biogenerics, leading
to sustainable double-digit growth in revenue. DRL is targeting strong growth in its
India formulations business and expects double-digit growth led by new launches
and strengthening of its field force (600 MRs added over the past few quarters to
total ~3,000).
Betapharm under pressure but cost structure aligned:
Given the price cuts
in Germany, DRL has, through a combination of low-cost sourcing and reduction in
staff and other overhead costs, aligned its business with the low-margin pure generic
business. Hence, we believe the German operations will not pressurize overall profits.
Increased forex hedges to help counter potential currency appreciation:
The management indicated that it has increased its forex hedges in the past few
months, which stand at US$340m relating to the remaining three quarters of FY11.
While this is still insufficient compared to its net US-dollar exposure of ~US$490m,
it puts DRL in a much better position than it was a few months ago.
Valuations and view
Traction in the branded formulations and US businesses, and focus on improving
profitability will be key growth drivers for DRL. We estimate core EPS of Rs48.6 for FY11
and Rs59.3 for FY12. We expect core EPS CAGR of 21% over FY08-12 (FY09 and FY10
EPS suffered due to Betapharm write-offs). Including upsides from Para-IV/low-
competition opportunities, we expect EPS of Rs63 for FY11 and Rs73.6 for FY12. Our
core estimates exclude the upsides from patent challenges/low-competition opportunities
in the US (current DCF value of Rs26/share for visible opportunities). The stock trades
at 27.2x FY11E and 22.3x FY12E core earnings. Our rating is
Under Review.
Covering Analyst(s):
Nimish Desai
+91 22 3982 5406
NimishDesai@MotilalOswal.com
Amit Shah
+91 22 3982 5423
Amit.Shah@MotilalOswal.com
August 2010
75

Sector:
Pharmaceuticals
6th Annual Global Investor Conference
Glenmark Pharmaceuticals
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
GNP IN
269.8
265
1.6
304 / 202
-8 / -9 / -9
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/09A 20,865
03/10A 24,616
03/11E
29,198
1,125
3,310
4,292
5,317
4.2
11.6
15.1
18.7
-64.3
174.9
29.6
23.9
62.5
22.8
17.5
14.2
4.2
3.0
2.5
2.1
7.0
14.1
15.1
15.9
8.0
12.7
13.6
15.1
4.4
3.6
3.0
2.5
27.1
14.9
11.1
10.5
03/12E 33,170
Company Represented By:
Mr Aditya Renjen, GM - IR
Key Takeaways
Guides for 20-25% topline growth led by US, India, other emerging markets;
higher R&D to partly temper EPS growth
Strong top-line growth guidance:
Glenmark expects strong top-line growth led
by a ramp-up in US generics, sustained growth momentum for India formulations
and a recovery in some emerging markets.
US business to improve:
Despite its muted 1QFY11 performance in the US, the
management has guided for stronger growth in the remaining three quarters of
FY11 led by new launches. The company recently received ANDA approvals for
some of its niche oral contraceptive products in the US. While the market for these
products is small, we expect relatively less competition for them. Glenmark has
over 50 ANDAs pending US FDA approval. The management believes that ~75% of
pending ANDAs are in the niche/low-competition category and will result in a
differentiated portfolio. We expect Glenmark's core US revenue (excluding one-
offs) to grow ~19% CAGR over FY10-12.
Traction in India formulations to sustain
Glenmark's India formulations business
has been growing at 15-20% over the past few quarters and it is likely to sustain
this growth momentum. We expect revenue to grow 16% CAGR over FY10-12.
Emerging markets a mixed bag:
The management has guided for a recovery in
emerging market performance over the next two years. But Glenmark is also
controlling its receivables and hence we expect more gradual growth in some of
these geographies leading to an overall 12% CAGR over FY10-12.
R&D expenses to increase:
As more NCEs move into clinical development,
Glenmark's R&D costs will rise, especially since there is no clarity on potential NCE
out-licensing in the near term. We believe this may partly temper EPS growth over
next two years.
Working capital improvement, debt reduction imperative:
While Glenmark
intends to control its receivables (~160 days as of 31 March 2010), we believe it will
be a gradual process given its target of strong growth in some emerging markets.
Net debt of ~Rs16b continues to be high. We believe it is imperative for Glenmark to
improve on these fronts for a re-rating of valuation multiples.
Valuations and view
We expect Glenmark to post 16.1% top-line CAGR over FY10-12 led by 24% CAGR for
the generic business, while the branded generic business is expected to grow at a more
gradual 14% CAGR. Higher R&D spend will put pressure on earnings growth. We expect
core EPS of Rs15.1 in FY11 (up 29.6%) and Rs18.7 for FY12 (up 24%). The stock trades
at 17.5x FY11E and 14.2x FY12E earnings with about 14-16% RoE. High net debt of
Rs16b implies fund-raising is imperative for de-leveraging balance sheet.
Neutral.
Covering Analyst(s):
Nimish Desai
+91 22 3982 5406
NimishDesai@MotilalOswal.com
Amit Shah
+91 22 3982 5423
Amit.Shah@MotilalOswal.com
August 2010
76

Sector:
Pharmaceuticals
6th Annual Global Investor Conference
Lupin
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
LPC IN
88.9
1,912
3.7
1,985 / 921
-5 / 13 / 91
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/09A 37,759
03/10A 47,405
03/11E
56,009
5,015
6,816
8,341
9,839
56.9
76.6
93.8
110.6
50.5
34.8
22.4
18.0
33.7
25.0
20.5
17.3
11.1
6.6
5.4
4.4
37.1
34.1
29.1
28.1
25.6
27.5
25.9
26.1
4.8
3.8
3.1
2.7
28.1
21.1
16.4
13.6
03/12E 63,562
Company Represented By:
Mr Ramesh Swaminathan,
President - Finance & Planning
Key Takeaways
Differentiated US portfolio, strong growth in India, improving profitability in
Japan to be key growth drivers
Differentiated US portfolio:
Lupin has differentiated itself from other generic
companies by launching at least one low-competition product in the US every year
for the past few years. This trend will continue, given the contribution from
Lotrel
in
FY11 and two or three such launches scheduled for FY12, coupled with the
commercialization of its oral contraceptive and ophthalmology products from FY12
and FY13. These potential low-competition launches and a steady addition to its
branded portfolio in the US will enable Lupin to post strong growth in the US over
the next two years. We model in 19% revenue CAGR for Lupin's US operations over
FY10-12 despite factoring in competition for
Suprax
and potential currency
appreciation. Delayed competition for
Suprax
can upgrade our estimates.
Traction in India formulations to sustain:
Lupin posted 21% CAGR in its domestic
formulations business over FY07-10, led mainly by its entry into new therapeutic
segments, new launches, expansion of its field force and gradually increasing
penetration in tier-II towns and rural areas. Lupin has guided for sustaining the
growth momentum in the coming years.
Japan holds long-term potential:
The management indicated that the Japanese
generic market held long-term potential given the government's initiative to boost
generics to lower healthcare costs. Lupin is well positioned to exploit this opportunity
through its subsidiary Kyowa. The company targets six new launches in Japan in
FY11. But the Japanese market has had price cuts of 12-15% recently, which Lupin
plans to counter through reduced API prices and a gradual shift of manufacturing to
its Indian facilities. We believe profitability is likely to improve in the long-term as
manufacturing shifts to India.
Inorganic initiatives:
The management indicated that while Lupin was open to
inorganic initiatives (especially in semi-regulated markets and the branded portfolio
in the US), it would not dilute its stringent payback criteria. We believe Lupin is
unlikely to make large acquisitions with extended paybacks.
Valuations and view
Lupin's underlying fundamentals are likely to improve gradually, led by an expanding US
generics pipeline, niche/Para-IV opportunities in the US, strong performance from
Suprax
and a ramp-up in
Antara
revenue (branded products in the US) and traction in the India
formulation business. We expect Lupin's core operations (excluding one-off upsides) to
post 16% revenue CAGR over FY10-12 led by 19% CAGR for the US and domestic
formulations businesses, leading to a 22% EBITDA and 20% EPS CAGR. The stock
trades at 20.5x FY11E and 17.3x FY12E EPS with a sustained 25-30% RoE.
Buy.
Covering Analyst(s):
Nimish Desai
+91 22 3982 5406
NimishDesai@MotilalOswal.com
Amit Shah
+91 22 3982 5423
Amit.Shah@MotilalOswal.com
August 2010
77

Sector:
Pharmaceuticals
6th Annual Global Investor Conference
Opto Circuits
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
OPTC IN
182.9
271
1.1
278 / 167
11 / 14 / 30
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/09A
03/11E
8,185
13,500
1,582
2,426
3,367
4,130
8.7
13.3
18.4
22.6
24.4
53.3
38.8
22.7
31.2
20.4
14.7
12.0
8.4
4.5
3.7
3.0
51.7
32.4
27.8
28.0
37.4
28.1
26.6
27.2
5.9
4.1
3.4
2.8
18.6
12.1
10.9
8.9
03/10A 10,776
03/12E 16,361
Company Represented By:
Mr Bhaskar, Director
Ms Shalaka & Ms Namita
- Investor Relations
Key Takeaways
Both invasive and non-invasive business segments are performing well. Growth
will be led by geographic expansion, better distribution reach, new product
launches and acquisitions
Non-invasive segment a major contributor to revenue
Opto’s non-invasive business will post 25% CAGR over 2-3 years led by expanded
distribution partly through acquisitions. Opto Circuits is trying to expand its product
offering, which will help it to acquire larger distributors. The opportunity in this segment
is large and Opto Circuits is still a marginal player, which gives it the chance to sustain
high double digit growth in the segment.
Invasive segment to lead growth
Opto’s invasive business offers immense potential and will lead growth in the long term.
The market opportunity is pegged at US$7b and Opto Circuits has developed many
products to penetrate this market. The competition in this space is limited with the top
four players commanding 85% of the market. Opto Circuits is promoting its products at
seminars and conferences to create awareness among physicians. Approval to sell
stents in the US could be a major catalyst for the company in the long term and accelerate
growth in the segment.
Opto Circuits to look for strategic acquisitions
The management indicated that the company is evaluating inorganic growth opportunities.
The company recently acquired Unetixs in the US to expand its product portfolio and
reach. The management indicated that acquisitions helped the company to expand its
product basket, thereby improving its position to tie up with large distributors and leverage
its distribution strength.
Return ratios to stay high
The management indicated that despite its growing size, the company would maintain
profitability with EBITDA margins at ~30%. Despite significant investment in working
capital, the company will be able to maintain high return ratios with RoCE and RoE of
over 25%.
Valuations and view
We believe Opto Circuits will grow strongly in its invasive and non-invasive businesses
due to the large market opportunity, expanding distribution network and low base. Despite
growing rapidly in the past, Opto Circuits remains a marginal player in the global medical
device industry. We believe this gives it an opportunity to sustain its high growth rate for
the next couple of years. The stock trades at 14.7x FY11E EPS of Rs18.4 and 12x FY12E
EPS of Rs22.6. Given the strong earnings growth expected and reasonable valuations,
the stock offers good potential upside. Maintain
Buy
with a target price of Rs339 (15x
FY12E EPS).
Covering Analyst(s):
Nimish Desai
+91 22 3982 5406
NimishDesai@MotilalOswal.com
Amit Shah
+91 22 3982 5423
Amit.Shah@MotilalOswal.com
August 2010
78

Sector:
Pharmaceuticals
6th Annual Global Investor Conference
Sun Pharmaceuticals
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
SUNP IN
207.1
1,778
8.0
1,846 / 1,122
-3 / 7 / 38
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/10A*
03/10A
03/11E
03/11E*
03/12E
41,028
34,344
44,836
48,721
49,187
13,567
9,557
12,642
15,742
15,221
65.5
46.1
61.0
76.0
73.5
-25.4
32.3
16.0
20.4
26.9
28.9
24.0
4.5
3.9
3.5
12.6
14.5
15.3
18.4
18.2
7.9
7.0
23.6
19.4
16.5
6.2
18.8
* Includes Para-IV upsides
Company Represented By:
Mr Uday Baldota, VP - IR
Ms Mira Desai, General Manager
Key Takeaways
Domestic formulations business, US formulations will be key growth drivers.
Targets 18-20% top-line growth in FY11 on a high base
The domestic formulation segment to grow in double digits
Sun Pharma’s domestic formulation business will sustain higher double digit growth in
the coming years, but due to increased competition in the chronic therapeutic segments,
significant outperformance will be difficult. Despite an increase in competition over the
years, company has maintained profitability.
Caraco makes slow progress in resolving USFDA issues
The management indicated that progress on the resolution of the USFDA issues at
Caraco was slower than expected and would involve product by product approvals from
the USFDA. The company may not seek approval for all the products it used to sell
earlier due to unfavorable economics.
US product pipeline gains strength
Sun Pharma filed 30 ANDAs in FY10 and four in 1QFY11, taking the total ANDAs pending
approval to 120, one of the strongest pipelines from India. The pipeline includes low-
competition, patent challenge and normal product opportunities.
The company has started filings for controlled substances in the US and expects to
generate meaningful revenue from controlled substances initiative in the US over the
next few years. It is a marginal player in this US$4b high-margin low-competition market.
Reiterates strong guidance for FY11
The management has guided for 18-20% top-line growth in FY11 despite the stoppage
of supplies of generic
Protonix
and
Eloxatin
in the US. We believe it would have included
upsides from some of the other Para-IV products (Effexor
XR
and
Exelon)
in the guidance.
Valuations and view
An expanding generic portfolio and change in product mix in favor of high-margin exports
is likely to bring long-term benefits for Sun Pharma. Its ability to sustain superior margins
even on a high base is a clear positive. Key drivers for future include: (1) a ramp-up in
the US business and resolution of Caraco’s cGMP issues, (2) monetization of the Para-
IV pipeline in the US, and (3) the launch of controlled substances in the US. The stock is
valued at 29.1x FY11E and 24.2x FY12E core earnings. Earnings growth is likely to
improve after the resolution of Caraco’s problems. Given the severity of the recent US
FDA action on Caraco, we believe the key catalyst to the stock’s performance will be
early resolution of US FDA issues.
Covering Analyst(s):
Nimish Desai
+91 22 3982 5406
NimishDesai@MotilalOswal.com
Amit Shah
+91 22 3982 5423
Amit.Shah@MotilalOswal.com
August 2010
79

Sector:
Real Estate
6th Annual Global Investor Conference
Anant Raj Industries
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
ARCP IN
294.6
118
0.8
164 / 99
-5 / -21 / -31
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
EPS
GROWTH (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
2,508
2,863
5,399
10,526
2,073
2,381
2,267
3,855
7.0
8.1
7.7
13.1
-52.5
14.9
-4.8
70.0
17.1
14.9
15.7
9.2
1.1
1.0
0.9
0.9
6.2
6.7
6.0
9.4
8.6
8.2
8.1
12.9
12.5
12.0
6.3
3.2
14.2
13.3
11.8
6.3
Company Represented By:
Mr Amit Sarin, CEO & Director
Mr Navneet Singh,
VP - Admin. & Marketing
Key Takeaways
High quality land bank; a focused city-centric player
Anant Raj Industries (ARIL) has a fully-paid land bank of ~982acres, with development
potential of 77msf, largely in the NCR (~90% is within 50km of Delhi). Given its city-
centric focus, ARIL will be a key beneficiary of the ongoing revival in the RE sector.
ARIL's concentration on city-centric projects, in-house construction capabilities, no
leveraging to pursue land-bank aggregation, multiple revenue streams with high
monetization visibility, and no pan-India ambitions differentiate ARIL from its peers.
Quick monetization of residential projects to boost operational cash flows
ARIL has witnessed a pick-up in its operational activity. In 1QFY11, it launched two
key residential projects in Kapasera and Manesar. The Kapasera project (~0.22msf)
has been fully sold at an average realization of ~Rs5,000/sf, while ~25% of the
Manesar project has been sold at an average realization of ~Rs2,300/sf.
The company has had several issues with its Hauz Khas project, repeatedly delaying
its launch. The management is hopeful of launching the project by 3QFY11. To
avoid any such delays at its other key residential project at Bhagwandas Road, the
management is contemplating proactive measures, which would lead to higher IRR
and facilitate faster monetization of the project.
ARIL expects residential projects to contribute ~Rs6.8b to its FY11 topline.
Robust rental income
ARIL follows an asset-heavy model for its commercial and retail projects, which
provide a steady flow of income. It has also witnessed a pick-up in its leasing activity.
Its rental income for 1QFY11 was ~Rs190m; with early signs of recovery visible, it
expects to achieve rental income of Rs1.2b in FY11 v/s Rs0.8b in FY10.
Effective deployment of idle cash in value-accretive projects to aid RoE
ARIL is in the process of acquiring land worth ~Rs10b in Gurgaon. This acquisition
will be in line with its strategy of effectively deploying unutilized surplus cash.
The management has indicated this land parcel would cost the company only ~Rs400/
sf as against the peak value of ~Rs1,400/sf. The land is zoned and can be launched
for monetization at short notice.
Valuation and view
ARIL has a robust business model, with multiple revenue streams and high monetization
visibility. We expect revenues to increase at 93% CAGR over FY10-12 and net profit to
increase at 28% over FY10-12. Our FY12E NAV for ARIL is Rs205/share. The stock
trades at ~0.9x FY12E BV of Rs139 and at ~41% discount to its FY12E NAV of Rs205,
which is very attractive compared to industry peers. Maintain
Buy.
Covering Analyst(s):
Siddharth Bothra
+91 22 3982 5407
SBothra@MotilalOswal.com
Sandipan Pal
+91 22 3982 5436
Sandipan.Pal@MotilalOswal.com
August 2010
80

Sector:
Real Estate
6th Annual Global Investor Conference
DLF
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
DLFU IN
1,714.4
310
11.5
491 / 252
5 / -16 / -37
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
EPS
GROWTH (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/09A 100,448
3/10A
3/11E
3/12E
74,209
93,465
119,851
44,696
17,300
19,304
26,080
26.0
10.0
11.2
15.1
-43.4
-61.3
11.6
35.1
11.9
30.8
27.6
20.5
2.4
1.8
1.9
1.8
18.5
5.6
6.6
8.6
15.6
7.6
8.1
10.1
6.8
9.9
7.6
5.7
12.1
21.0
15.4
12.7
Company Represented By:
Mr Anurag Kalra, VP - IR
Mr Rajiv Goel, Senior GM - IR
Key Takeaways
Recurring cash flows to account for 35-40% of operating cash flows
DLF is witnessing a strong recovery in the commercial vertical. It booked ~1.4msf of
commercial area in 1QFY11 against its target of 3-4msf of commercial leases in
FY11. The management expects ~Rs14b rental income in FY11 from its 20msf
annuity assets.
DLF has guided total operating cash flows of ~Rs25b, net of construction capex, for
FY11. It expects recurring income from rentals to account for 35-40% of its operational
cash flows, going forward.
Leverage to peak in 2QFY11
DLF has to repay a further ~Rs11b of preferential CCP's in 1QFY10. As a result, its
debt/equity is likely to peak in 2QFY11. Its net debt/equity, which was ~0.79x in
1QFY11, could increase to ~0.9x. DLF intends to bring down its net debt/equity to
~0.5x through asset sales and strong operational cash flows.
In 1QFY11, DLF achieved asset sales of ~Rs2.9b. However, the management has
guided asset sale / divestment of ~Rs20b primarily from (i) refund from Haryana
Government and DDA, (ii) sale of some hotel plots, and (iii) dilution of stake in
Aman Resort to private equity players. The entire proceeds will be utilized for debt
repayment.
Lack of clarity on value housing plans
DLF is in the process of finalizing its value housing plans. It aims at margins of 35-
40% in the value housing vertical. The management had guided residential sales of
15-18msf at the start of FY11; it now expects sales of ~15msf in FY11. DLF's ability
to achieve the target would depend on successful rollout of its value housing vertical.
DLF intends to launch a residential project of ~0.7msf in Greater Kailash in 2QFY11/
3QFY11. The management believes the lion's share of its expected sales volume
will be contributed by new launches; unreleased inventories of existing projects are
likely to contribute ~3msf of sales.
The company has indicated that its much awaited NTC Mills project at Mumbai is
unlikely to be launched very soon; the specialized architectural planning and design
required for this tall-structured project is yet to be finalized.
Valuation and view
The stock trades at 20% discount to our revised FY12E NAV of Rs388. It trades at 20.5x
FY12E EPS of Rs15.1 and 1.8x FY12E BV of Rs168.5. We expect DLF to benefit significantly
from the expected revival in the commercial and retail verticals. A successful REIT
listing at an attractive cap rate would be a key near-term catalyst for the stock. We
maintain
Buy.
Covering Analyst(s):
Siddharth Bothra
+91 22 3982 5407
SBothra@MotilalOswal.com
Sandipan Pal
+91 22 3982 5436
Sandipan.Pal@MotilalOswal.com
August 2010
81

Sector:
Real Estate
6th Annual Global Investor Conference
DB Realty
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
DBRL IN
243.3
405
2.1
540 / 355
-
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
EPS
GROWTH (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/09A
3/10A
4,644
9,512
1,459
2,520
160.0
10.4
72.7
40.5
3.3
8.1
13.2
11.3
29.4
Company Represented By:
Mr Jayesh Doshi, Group CFO
Mr Ahmad Mashkoor, AGM - Fin.
Covering Analyst(s):
Siddharth Bothra
+91 22 3982 5407
SBothra@MotilalOswal.com
Key Takeaways
Largest redevelopment player in Mumbai
DB Realty is one of the largest players and a pioneer in the redevelopment business
in Mumbai. Focusing on redevelopment and PPP projects allows the company access
to low cost, prime land bank in land-starved Mumbai. As a result, DB Realty enjoys
a low risk, low capital intensive model, which ensures superior RoE.
The management believes that the redevelopment business has immense potential
in Mumbai and the company’s unique operational strength to execute such projects
places it in a strong position to tap this opportunity.
Concerns regarding Central Mumbai market overshadowing positives
DB Realty has significant exposure to the Central Mumbai market. It acknowledges
that the consensus outlook on the Central Mumbai luxury market is bearish due to
concerns of oversupply and affordability issues. However, the management believes
that a large proportion of the ‘on-paper supply’ will not materialize in the near-term
due to the operational complexity involved in each of these large-sized projects.
Hence, the price correction will not be as severe as perceived.
The management has also indicated that as its business model involves low cost
land, the company is strongly positioned to accept any potential price correction
without much impact on margins.
High visibility on near-term monetization
DB Realty has achieved pre-sales of ~Rs25b from its various ongoing projects. The
pace of construction in all its ongoing projects has been good, which provides high
monetization visibility.
Continued sales momentum at its key projects along with uninterrupted cash flows
could lower concerns relating to negative outlook on the Central Mumbai market.
Acquisition of high value accretive projects is the key catalyst
DB Realty has recently acquired a 53acre redevelopment project in Bandra, with the
company’s economic interest being ~8msf of saleable area. We believe the project
has the potential to add Rs20b to its NAV.
Valuation and view
Despite DB Realty’s superior land bank and its leadership position in the Mumbai
redevelopment vertical, the stock could continue to be under pressure in the medium
term, on account of concerns on the Central Mumbai market. The key catalysts for the
stock would be (1) acquisition of new high value accretive projects, (2) better than
expected sales at its key Central Mumbai projects, and (3) change in outlook on the
Central Mumbai market.
Sandipan Pal
+91 22 3982 5436
Sandipan.Pal@MotilalOswal.com
August 2010
82

Sector:
Real Estate
6th Annual Global Investor Conference
Godrej Properties
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
GPL IN
69.9
695
1.1
764 / 438
-
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
EPS
GROWTH (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/07A
3/08A
3/09A
3/10A
1,372
2,274
2,555
3,134
288
750
747
1,228
44.7
12.4
12.4
17.6
137.6
-72.2
-0.5
64.5
15.5
55.9
56.2
39.5
10.0
17.4
14.0
5.9
64.6
31.2
25.3
15.1
40.8
34.1
22.0
18.4
4.2
19.6
18.9
17.4
11.3
37.2
40.0
61.7
Company Represented By:
Mr Pirojshah Godrej,
Executive Director
Key Takeaways
Aggressive launch plan:
Godrej Properties has witnessed strong sales momentum
in its residential projects in Ahmedabad, Kolkata and Mumbai. GPL plans to launch
~5msf of projects (in phases), including its recently acquired project in the NCR
(2QFY11), and projects in Mangalore, Kochi, Chennai, Hyderabad and Bangalore
(3Q/4QFY11) in FY11.
Operating margins expected to improve:
The decline in EBITDA margin in
1QFY11 was mainly due to low profitability in
Godrej Waterside,
a commercial project
in Kolkata. Profitability on this project was low when it was launched and sold in
FY09 and FY10. Revenue recognition of the project was reflected in 1QFY11. In
FY11, the management expects GPL’s EBITDA margins to improve to ~30%, as
some of the new projects start contributing to the top line.
Acquisition through JDA route to continue, foray into NCR:
During the quarter,
GPL entered the NCR region through the JDA route for a nine-acre plot with 1.04msf
developable area and 70% (average) revenue share for GPL. With this, the company
moved a step closer towards a pan-India presence. It is present in 11 Indian cities.
GPL is evaluating new projects through the JDA model, including a few in Mumbai.
But the management was unwilling to provide an update on a possible JDA to develop
a prime land parcel near BKC, Mumbai.
Leverage to increase:
GPL has a comfortable net debt/equity of 0.6x. The
management indicated that it may increase debt to pursue construction of ongoing
projects.
Valuation and view
GPL’s business model not only lowers the business risk but also makes the model
less capital intensive. This model is more lucrative as it aids faster monetization
and churning of land.
GPL has the unique strength to emerge as a true pan-India player due to its strong
brand advantage. While many real estate players have been trying to position
themselves as pan-India players, most have not been able to make a mark outside
their micro-markets as their brand name is not well known in India (this is mainly
with regard to the residential market).
GPL entered into MOUs with Godrej group companies to develop land held by them
and currently has firm MOUs for development of 75 acres in Mohali, 100 acres in
Bangalore and 10 acres in Hyderabad. We believe these MOUs hedge the risk
against rising land prices and provide significant growth opportunities. Besides, the
fact that GPL is majority owned by GIL rules out a major conflict of interest issue.
GPL trades at a PER of 39.1x FY10 EPS of Rs17.6 and a PB of 5.9x its FY10 BV of
Rs117/share.
Not rated.
Covering Analyst(s):
Siddharth Bothra
+91 22 3982 5407
SBothra@MotilalOswal.com
Sandipan Pal
+91 22 3982 5436
Sandipan.Pal@MotilalOswal.com
August 2010
83

Sector:
Real Estate
6th Annual Global Investor Conference
Mahindra Lifespaces
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
MLIFE IN
40.8
491
0.4
550 / 287
3 / 18 / 38
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
EPS
GROWTH (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
3,418
4,179
5,264
7,591
641
785
1,051
1,258
15.4
19.0
25.5
30.6
-3.5
22.7
33.8
19.7
31.3
25.6
19.1
16.0
2.2
2.1
1.9
1.7
6.9
7.9
9.8
10.6
7.8
8.9
11.1
13.1
6.4
5.5
4.3
3.0
30.3
19.6
12.5
11.0
Company Represented By:
Mr Anita Arjundas, MD & CEO
Mr Vishnu Banka, Head - Fin.
Mr Rajendra Joshi,
VP - Sales & Marketing
Key Takeaways
To focus on two key real estate verticals
MLL’s stated strategy is to focus on two key real estate segments – residential
projects and large-format integrated infrastructure development projects.
MLL has developed residential projects covering 4.9msf. It is developing 2.1msf and
~6msf are in the planning stage. It has signed an MoU for acquiring 23acres or
1.8msf of land in Pune and a JDA for 10acres (1msf) of projects in Hyderabad.
Sale of residential units was Rs920m in 1QFY11 v/s Rs210m in 1QFY10 and Rs5.9b
in FY10. Its projects like
Eminente
at Goregaon (Mumbai),
Spendour
at Bhandup
(Mumbai),
Royale
in Pune, and
Chloris
in Faridabad are progressing as per schedule.
Steady progress at ongoing SEZs
MLL has two key ongoing SEZ projects at Chennai and Jaipur. The Chennai SEZ is in
the late monetization stage, with focus now on the residential and institutional areas,
and the Jaipur SEZ is in the early monetization phase, with the sale of the processing
area underway. MLL plans to expand its Chennai SEZ by 100 acres in FY11 and
complete the acquisition of the remaining ~370 acres at the Jaipur SEZ.
During 1QFY11, MLL signed up four customers – one under lease and three under
MoUs at its Chennai SEZ, aggregating to 18acres. The total number of operational
companies increased to 34 companies. The total customer base at Jaipur SEZ was
35 customers, while the total employment stood at 2,000 people. The recent
transactions in the Chennai SEZ have achieved average realization of ~Rs16m/
acre. Transactions in the Jaipur SEZ are happening at ~Rs8.5m/acre.
New acquisitions in the SEZ vertical to be key triggers
MLL is working on acquiring an incremental 1,000acres for a new SEZ/DTA in North
Chennai. Project is being designed to provide world-class infrastructure to ancillary
industries (auto components, electronics, precision engineering and logistics).
Apart from this, MLL is also acquiring land near Pune for a large format development
in Maharashtra (a company presentation indicated the area at ~3,000acres).
Valuation and view
MLL has a sound business model, a healthy balance sheet and no land outstandings.
Our SOTP value for MLL is Rs552/share: (1) Chennai SEZ at Rs180/share, (2) Jaipur
SEZ at Rs174/share, (3) residential vertical at Rs179/share, and (4) other rental assets
at Rs50/share. Our valuations currently do not include: (1) the 52-acre Thane project,
(2) the 50-acre commercial land at Chennai SEZ, and (3) two planned SEZs / Industrial
Parks in Chennai and near the Mumbai-Pune Expressway (for which ~Rs1.3b of advances
have already been given). The stock trades at ~1.7x FY12E adjusted book value of
Rs287.3 and at 10.7% discount to its SOTP value. Maintain
Buy.
Covering Analyst(s):
Siddharth Bothra
+91 22 3982 5407
SBothra@MotilalOswal.com
Sandipan Pal
+91 22 3982 5436
Sandipan.Pal@MotilalOswal.com
August 2010
84

Sector:
Real Estate
6th Annual Global Investor Conference
Unitech
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
UT IN
2,435.6
82
4.3
118 / 65
9 / 3 / -28
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
EPS
GROWTH (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
28,945
29,313
37,393
50,971
9,689
6,751
7,891
10,634
6.0
2.8
3.2
4.3
-41.7
-53.6
14.1
34.8
13.8
29.6
26.0
19.3
3.3
2.1
1.9
1.8
18.7
6.3
6.7
8.3
13.2
6.3
6.5
9.3
10.0
8.8
6.6
4.6
18.1
24.0
20.9
13.3
Company Represented By:
Mr Sanjay Chandra, MD
Mr R Nagaraju,
VP-Corporate Planning
Key Takeaways
Focus on volumes, cash flows to boost IRRs:
Unitech focuses on mid-income
housing and affordable housing to achieve volumes, increase cash flow and boost
IRRs instead of focusing on margins. Unitech’s earlier strategy was a focus on
luxury/premium housing, which accounts for 4-5% of the real estate market. The
mid income or affordable housing segment accounts for a significant portion of the
real estate market. There is unmet housing demand of ~24m homes, which provides
a secular opportunity to companies with a focus on mid-income housing.
Focus entirely on execution:
Unitech is focusing on execution to accelerate its
cashflow and achieve higher output capability. Unitech has ~35msf of projects under
construction and hopes for sales of 12-14msf in FY11. In this regard, Unitech is
working on standardizing processes to cut cost and time. The management is hopeful
that these steps will allow the company to achieve higher throughput.
NCR, Chennai, Mumbai to drive volume:
Unitech’s strategy to churn a large land
parcel in a phased manner over 7-8 years provides it with the opportunity to capture
the value through the ageing effect. The management indicated that after a successful
launch of initial phases, land parcels in the NCR, Chennai and Mumbai would command
a lion’s share of sales volume.
Aggressive growth plans for UT Infra:
Unitech has plans to expand in the
infrastructure segment through its 35% associate company UT Infra. Unitech’s prior
experience in this field coupled with a strong in-house order book from residential
sales in Unitech will allow UT Infra to achieve strong growth.
Valuation and view:
Unitech is available at ~11% discount to its FY12 NAV of
Rs95/share. It is available at 19.8x FY12E EPS of Rs4.3 and 1.8x FY12E BV of Rs46.6/
share. Among large cap RE stocks, it has one of the most comfortable balance
sheets with a low leverage of ~0.5x, strong near term cash flow and earnings
visibility of 24% CAGR, over FY10-12.
Buy
with a price target of Rs95/share.
Covering Analyst(s):
Siddharth Bothra
+91 22 3982 5407
SBothra@MotilalOswal.com
Sandipan Pal
+91 22 3982 5436
Sandipan.Pal@MotilalOswal.com
August 2010
85

Sector:
Retailing
6th Annual Global Investor Conference
Pantaloon Retail
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
PF IN
211.1
461
2.1
531 / 265
6 / 0 / 31
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
06/09A 63,417
06/10E 77,754
06/11E
96,398
1,406
2,033
3,058
4,020
7.4
9.9
14.5
19.0
-6.6
33.5
46.9
31.4
62.7
46.9
32.0
24.3
3.8
3.2
2.9
2.6
6.1
6.8
9.1
10.7
10.1
10.6
12.1
13.4
1.8
1.5
1.2
1.0
17.3
13.8
11.3
9.5
06/12E 114,761
Company Represented By:
Mr Ashish Chakravarti,
Senior Manager - IR
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Key Takeaways
Sales growth to be led by same-store sales growth, space addition
Buoyant consumption sentiment and improving store economics is instilling confidence
in faster store roll-outs.
A learning after the recession is to focus on categories and not formats. PRIL sees
its sales being clubbed under foods, fashion, general merchandise and home
furnishing. Food has emerged as a priority for PRIL as it aims to increase its share
from ~30% currently to 35% over two years.
The management expects to post ~25% sales CAGR over FY10-12 due to 8-10%
SSS growth and 17% space addition (2.5m-3msf a year).
Margins to be range bound; benefits of private label, operational efficiencies
to partly offset impact of deteriorating sales mix
The management expects to maintain EBIDTA margins at 10-11%. Even though
lower margin foods will exert pressure on margins due to rising contribution (30-
35% over FY10-12), the company plans to offset this with a richer sales mix, higher
share of private labels and fresh grocery and operational efficiencies.
In apparel, the management aims to improve the sales mix by changing the
positioning of the product portfolio with marginally higher price points and better
margins. Room for improvement in te private label mix (currently ~85%) is limited.
Management open to inorganic opportunities; FDI reform will provide funds
PRIL is open to inorganic opportunities if the acquisition brings competitive advantage
to the table at reasonable valuations.
FDI in organized retail is a priority for the government as it will provide direction to
several stakeholders.
PRIL views FDI as positive for incumbents as it will open up avenues for funds and
result in technology transfer (best practices of retail majors) to India.
FCF in 15-18 months; benefits of integration to be reflected from FY12
PRIL expects to be free cash flow positive in 15-18 months. Currently ~60% of
capex needs are being met through internal accruals.
Benefits of a higher sales per square foot (target to increase to Rs10,000/sf from
current Rs8,500) and inventory turnover are likely to be reflected in FY11-12.
Supply chain integration of older stores is likely in 15-18 months. This would cut
inventory levels from Rs1,900/square foot to Rs1,650/square foot in 2-3 years.
Debt levels are likely to fall from the current 1.2x to 1x in near future.
Valuation and view
We estimate a 39% EPS CAGR over FY10-12E. The stock trades at 32x FY11E EPS
of Rs14.5 and 24.3x FY12E EPS of Rs19. Maintain
Buy.
Nikhil Kumar
+91 22 3029 5120
Nikhil.N@MotilalOswal.com
August 2010
86

Sector:
Retailing
6th Annual Global Investor Conference
Shoppers' Stop
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
SHOP IN
34.8
649
0.5
673 / 176
14 / 81 / 212
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/07A
7,996
262
69
-644
479
7.5
2.0
-4.6
-73.5
86.3
326.0
-35.2
47.2
8.5
8.5
10.3
7.8
8.9
2.3
-16.1
14.8
22.1
20.1
22.9
26.7
3.1
2.4
2.1
1.8
37.9
46.9
64.3
24.0
03/08A 10,900
03/09A 12,624
03/10A 14,105
-18.5 -1,027.1
13.7
-174.4
Company Represented By:
Mr Govind Shrikande, CEO
Mr C B Navalkar, CFO
Key Takeaways
Consumption sentiment surprises positively;
aspirational consumption
strong
Over the past six months the willingness of the Indian consumer to spend (as reflected
by LTL growth), has come as a pleasant surprise. While some part of it has been
due to a base effect and pent-up demand, it indicates a shift in consumption behavior.
Much of the revival is led by
aspirational consumption
as consumers left behind
worries of job losses and recession.
Shoppers’ Stop’s transition from premium to
bridge to luxury
has been in sync with
the changing lifestyle of urban India and has gone well with consumers. Some of
the stores in smaller cities such as Bhopal, Ludhiana and Lucknow, are generating
sales per square foot that is as high as those in Mumbai/NCR.
The management believes its model is scalable in 35 cities (>1m population) against
its current presence in 13 cities. But it is likely to add 50% of stores in existing cities
itself due to falling catchments expected over 2-3 years.
Incremental investments largely in well-established core portfolio
Even though capex plans for 2-3 years are fairly large (24 stores in the next 30
months), much of the incremental investment is likely to be in established formats,
such as Shoppers’ Stop. Specialty formats are likely to sustain their growth with
most new store openings being SIS thereby improving revenue productivity.
Shoppers’ Stop has exited non-profitable ventures and reiterated its intent of not
creating an overhang on the balance sheet. It will focus on core portfolio (department
stores, mac and online retailing) in which it had RoCE of 26.8% in FY10.
Hypercity may turn EBIDTA positive by 4QFY11; may increase stake
The management is confident of Hypercity with most of its stores likely to generate
sales of Rs700m-800m in a steady state. But some stores have crossed Rs1b sales
in their first year of operation.
Shoppers’ Stop plans to have smaller formats to penetrate tier-2 cities.
Food and grocery accounts for 55% of sales in Hypercity, which is capping gross
margins at 20.5%. It plans to increase the proportion of apparel and general
merchandise to increase profit margins.
Hypercity has achieved store level EBIDTA and is likely to achieve operating level
breakeven by 4QFY11.
Shoppers’ Stop plans to increase its stake in Hypercity, after having recently raised
it to 51% to participate in the growth opportunity.
Valuation and view
Shoppers’ Stop is one of the best plays on rising consumerism in urban India. The
stock trades at 47.2x FY10 EPS of Rs13.7.
Not Rated.
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Nikhil Kumar
+91 22 3029 5120
Nikhil.N@MotilalOswal.com
August 2010
87

Sector:
Telecom
6th Annual Global Investor Conference
Idea Cellular
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
IDEA IN
3,299.8
75
5.3
85 / 47
24 / 15 / -20
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A 101,485
3/10A 124,476
3/11E
3/12E
153,610
177,685
9,008
9,540
4,731
6,033
3.0
3.1
1.4
1.8
-23.7
2.0
-53.4
27.5
24.7
24.2
52.0
40.8
1.6
2.0
2.1
2.0
10.4
7.6
4.1
5.0
7.4
5.5
4.1
5.0
2.6
2.4
2.4
2.0
9.5
8.7
9.8
7.2
Company Represented By:
Mr Akshaya Moondra, CFO
Mr Pradeep Agrawal, AVP
Mr Arpit Gupta, Sr Manager
Key Takeaways
Limited competition from new entrants
Except Uninor, competition from other entrants has been marginal with most of the
new licensees (Etisalat, Videocon, Loop, S Tel) yet to make a full-blown rollout.
Idea has also been less aggressive in its seven new circles (being a late entrant)
with focus on curbing EBITDA loss rather than aggressively pursuing market share.
The business case for new GSM entrants appears unviable.
RPM pressure has been declining
RPM pressure has been declining over the past few months. While Idea reported
~5.5% QoQ average RPM decline in 1QFY11, decline in exit RPM (QoQ) was likely
arrested at 2-3%.
RPM could stabilize over the next one year at current levels though there could be
some more downside in the near-term.
We highlight that 2Q has historically been a seasonally weak quarter for wireless
companies.
Leverage within reasonable limits even post 3G payout; refinancing 3G debt
remains an option
Idea’s net debt/EBITDA is ~3x after the 3G payouts and net debt/equity is < 1x.
Equity raising at parent level is unlikely over the next one year; however the company
has options to monetize its tower assets (stake in Indus and its own portfolio of
~8,000 towers).
The company might consider re-financing 3G loans through ECBs. As per RBI
guidelines, the companies can raise ECB for the 3G spectrum payout until 31 May
2011.
Valuation and view
Idea currently trades at an EV/EBITDA of 9.8x FY11E and 7.2x FY12E.
We have a
Buy
rating on the stock with an SOTP based target price of Rs77.
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
August 2010
88

Sector:
Telecom
6th Annual Global Investor Conference
Reliance Communications
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
RCOM IN
2,063.0
177
7.9
320 / 132
-12 / -5 / -53
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A 229,410
3/10A 222,457
3/11E
3/12E
211,587
239,785
61,552
48,812
12,842
15,788
29.8
23.7
6.2
7.7
11.7
-20.7
-73.7
22.9
5.9
7.5
28.4
23.1
1.0
0.9
0.9
0.9
18.7
12.6
3.2
3.8
8.9
5.8
3.0
3.4
2.6
2.5
3.1
2.7
6.3
7.1
9.8
8.0
Company Represented By:
Mr Arvind Narang, Joint President
Mr J Mukund, Dy General Manager
Key Takeaways
Tower de-merger on track
Merger of tower assets with GTL Infra could happen before the targeted time-
frame. RCom has earlier announced that the transaction would close by the end of
CY10.
The company expects Rs150b-180b cash inflow from the tower deal, which would
reduce its net debt by ~50%; however, fund raising at GTL Infra level remains a
concern for investors, given the potential high leverage of the merged entity.
While we estimate potential rent outgo of ~Rs29b due to tower de-merger based
on a rental of ~Rs30,000/site/month, the management believes that net outgo could
be ~30% lower due to certain costs related to towers also being transferred from
RCom to the merged entity.
Marketing budgets could increase post MNP
Higher end subscribers are currently unable to switch operators, as MNP is not
available.
However, above-the-line marketing could become more aggressive post MNP
implementation, as operators will look to retain and target high-end subscribers.
The post-paid segment contributes disproportionately to revenue (4-5% of subscriber
base contributes 20-30% of revenue).
Higher competition in the post-paid segment need not result in tariff wars, as these
subscribers are believed to be less price-conscious than pre-paid subscribers.
No significant incremental capex/opex for 3G
RCom has a “3G ready” pan-India GSM network running on 1800MHz band in 14/22
circles. Hence, incremental capex/opex for running the 3G network would not be
significant.
3G rollout is unlikely to add 1:1 tenancies for tower companies. Tenancy requirement
for the industry could increase by 25-30%, with higher tenancies contributed by
incumbents operating on 900MHz.
The management has reiterated its Rs30b capex guidance for FY11.
Other highlights
RPM outlook is relatively stable.
As announced earlier, the company is in discussions with potential investors for
strategic stake sale up to 26%.
Valuation and view
The stock trades at an EV of 9.8x FY11E and 8x FY12E EBITDA.
Under Review.
89
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
August 2010

Sector:
Telecom
6th Annual Global Investor Conference
Tulip Telecom
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
TTSL IN
145.0
184
0.6
250 / 158
-2 / -17 / -22
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
16,144
19,664
24,246
30,138
2,505
2,755
3,495
4,738
14.7
17.0
21.5
29.2
35.3
15.0
26.9
35.6
12.5
10.8
8.5
6.3
4.6
3.3
2.4
1.8
44.5
34.6
32.6
32.6
17.8
16.4
18.4
21.5
2.1
1.8
1.5
0.9
10.2
6.7
5.1
3.0
Company Represented By:
Lt Col HS Bedi, CMD
Mr Sanjay Jain, CFO
Key Takeaways
Stake buy in Qualcomm’s BWA venture gives low investment-low participation
B2C exposure
Tulip has acquired 13% stake in Qualcomm’s BWA venture for a consideration of
~Rs1.4b.
It views the partnership as an investment, with expectation of reasonable returns in
next 2-3 years.
Qualcomm is likely to divest the venture after building a TD-LTE network in its four-
circle footprint (Delhi, Mumbai, Haryana, Kerala).
The venture would fulfill Tulip’s objective of safeguarding its enterprise business
(for at least two years) by promoting TD-LTE technology.
Fiber revenue contribution up to 25%
The company has laid 6,000km of fiber across 300 cities in the last 1.5 years; Fiber
reach is expected to expand further to 600 cities in one year.
Tulip believes that fiber remains the preferred medium for last mile, hence fiber
rollout will de-risk it from new competition.
Contribution of fiber to revenues is expected to increase to ~70% in two years (v/s
~25% currently and nil six quarters ago).
Capex intensity to decline
Tulip incurred its peak capex of Rs7.4b in FY09, followed by capex of ~Rs4.5b in
FY10.
The company has guided a capex of Rs3.5b-4b for FY11 (v/s our estimate of Rs4.8b);
FY12 capex could be Rs3b-3.2b (v/s our estimate of Rs3.8b).
Other highlights
The management expects limited impact of Reliance Industry’s (RIL) BWA entry as
it believes that RIL’s launch would be focused more on the mass market than
enterprise market.
FCC license obtained in USA (serving as a landing station abroad) would enable the
company to provide data connectivity to Indian clients to USA.
Valuation and view
The stock trades at 6.3x FY12E EPS and an EV of 3x FY12E EBITDA. We have a
Buy
rating, with a DCF-based price target of Rs250 (implied FY12E EV/EBITDA of 4.5x;
P/E of 8.6x).
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
August 2010
90

Sector:
Textiles
6th Annual Global Investor Conference
Vardhman Textiles
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
VTEX IN
56.6
305
0.4
317 / 128
11 / 23 / 90
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
29,654
33,777
36,633
38,386
919
2,407
2,653
2,730
16.2
42.5
46.8
48.2
-32.0
52.7
10.2
2.9
18.8
7.2
6.5
6.3
1.2
1.1
0.9
0.8
6.6
15.0
14.4
13.1
5.0
10.5
12.1
12.3
1.3
1.2
1.0
0.9
8.6
5.6
4.7
4.1
Company Represented By:
Mr Sachit Jain,
Executive Director
Mr Rajiv Thapar,
CGM - Fin. Accounts & Taxation
Ms Jasmeet Gill,
Sr Manager Corp Finance
Key Takeaways
Global textiles industry exiting deflationary phase
The global textiles industry is exiting the deflationary period due to macro factors
such as irreversible higher cost structure in China and appreciating Chinese currency.
This is already reflected in the fact that China has not been able to increase its
market share in the global textiles industry over the last 2-3 years. India currently
has a market share of ~4%, which could move up sharply, going forward.
Yarn profits at historic highs
Cotton yarn prices have moved up by almost ~35% in the last few months to ~US$3.4/
kg, close to the 15-year historic high. Indian upstream cotton textile players are in
an advantageous position due to the bumper cotton crop in India. The management
expects current high yarn margins to sustain in 2QFY11.
Fresh capex of Rs8b planned over FY11-12
Vardhaman Textiles (VTL) is firming up capex plans of Rs8b spread over FY11-13
(with Rs3.5b in FY11 itself for the expansion of its yarn manufacturing capacity).
The management intends to go ahead with this capex plans irrespective of whether
TUF benefits are available or not. It has already got TUF loans sanctioned for its
Rs3.5b capex plan for FY11.
Implementation of IFRS could lower depreciation and boost RoE
VTL expects its RoCE to jump from FY12 due to change in depreciation policy under
IFRS. Currently, textile companies are forced to write-off their spinning assets over
10 years although they have a life of 17-20 years. From FY12, VTL plans to change
its depreciation policy, which is likely to result in increased profitability, boosting
RoE and RoCE. Total depreciation charged under yarn segment in FY10 was Rs1.5b.
Capital employed for the yarn segment as at 1QFY11 was ~Rs24b, which includes
Rs6b-7b of working capital. There could be savings of Rs600m-700m at PBT level or
Rs9-10/share at net profit level (20% of our current FY12 EPS estimate of Rs48.2).
Valuations attractive
VTL has spent Rs21b over FY07-10 on capacity expansion. While most of its added
capacities were commissioned in FY09, capacity utilization was low till FY10. We
expect FY11 to be the first full year of optimum utilization of these capacities.
We estimate VTL’s free cash flow over FY11-13 at Rs11b (63% of its current market
cap). We expect the company to generate cash profits of ~Rs17b over FY11-13
while it has capex plans of ~Rs8b for this period.
The stock trades at 6.3x FY11E and 6.1x FY12E EPS, and 0.8x FY12E BV of Rs368.
We maintain
Buy
with a price target of Rs368 (1x FY12E BV).
Covering Analyst(s):
Siddharth Bothra
+91 22 3982 5407
SBothra@MotilalOswal.com
August 2010
91

Sector:
Utilities
6th Annual Global Investor Conference
CESC
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
CESC IN
125.6
396
1.1
452 / 291
1 / -10 / 7
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
EPS
YOY (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/09A
03/10A
03/11E
03/12E
30,313
32,928
37,240
40,842
3,682
4,333
4,789
5,341
29.3
34.5
38.1
42.5
23.9
17.7
10.5
11.5
13.6
11.5
10.3
9.2
1.8
1.6
1.4
1.3
13.0
13.8
13.4
13.2
11.0
10.8
11.4
10.4
2.0
2.0
2.0
2.2
10.0
8.9
7.7
8.1
Company Represented By:
Mr BL Chandak,
Vice President-Corp. Finance
Mr Pankaj Kedia- IR
Key Takeaways
Steady cash flow from regulated generation/distribution business
CESC’s generation/ distribution business provides steady cash flow of over Rs3b.
Planned capex of Rs2.3b-2.5b in FY11 to strengthen its distribution business, which
will increase the company’s regulated asset base.
1.2GW under construction projects on track, development pipeline of 4GW
The 600MW Haldia project 600MW has received all requisite clearances and debt
sanctions. The project will be based on linkages (70%, LOA received) and imported
coal (30%). It is expected to sell 75% of generation on regulated terms to CESC’s
distribution business and the rest on a merchant basis.
The 600MW Chandrapur Project has received all clearances and is expected to be
commissioned by March 2013 with offtake mix of regulated/case-1 and merchant.
3GW of projects are under development, comprising 1GW in Jharkhand (coal block
allotted with 110mt, 50% stake), 1GW in Orissa (a large part of the land is acquired,
and the project has secured 70 points out of 100 for linkage and thus high possibility
of securing coal linkages) and 2GW in Bihar (MoU signed with state government).
Spencer: EBITDA break even at store level, FY11 cash losses target Rs1.5b
Spencer achieved store level break even at EBITDA level in 1QFY11, which will be
followed by breakeven at the zonal level (to recover distribution, back-end cost) and
lastly at the company level (to cover advertising costs and corporate overheads).
Spencer rationalized its overall area under operations by consolidating operations
of daily and express stores (down 19% to 176 stores). Retail operation sales
improved to Rs906/square foot in June 2010 from Rs736/square foot in June 2009
and Rs811/square foot in March 2010.
Valuations and view
We expect CESC to report net profit of Rs4.8b in FY11 (10.5% YoY) and Rs5.3b in FY12
(11.5% YoY). At the CMP of Rs393, the stock trades at a PER of 10x FY11E and 9.2x
FY12E. Maintain
Neutral.
STATUS OF PROJECTS PIPELINE
PROJECTS
STATE
CAP (MW)
REMARKS
Covering Analyst(s):
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Nalin Bhatt
+91 22 3982 5429
NalinBhatt@MotilalOswal.com
Dumka
Jharkhand
1,000
110mt of a coal mining block allotted, MoU signed
with the Jharkhand government, land acquisition
process initiated, mining prospecting license obtained.
A large part of land acquisition has been
completed, awaiting coal linkages.
MoU signed with the Bihar government.
Dhenkanal
Pirpainty
Orissa
Bihar
1,320
1,000
August 2010
92

Sector:
Utilities
6th Annual Global Investor Conference
GVK Power and Infrastructure
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
GVKP IN
1,579.2
44
1.5
54 / 40
-4 / -14 / -17
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
EPS
YOY (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
5,138
17,866
22,613
27,537
1,076
1,559
3,240
5,044
0.8
1.0
2.1
3.2
-20.9
34.1
100.0
55.7
56.9
42.4
21.2
13.6
2.6
2.2
2.0
1.8
4.7
4.9
9.5
13.1
2.1
4.3
6.5
8.9
6.7
2.8
2.2
2.0
19.5
11.1
6.5
4.8
Company Represented By:
Mr Viren Vijaya Shankar,
Senior Manager - IR
Key Takeaways
Growth at MIAL: real estate monetization, expansion plans in progress
GVK has finalized design and layout plans for real estate monetization and is awaiting
MMRDA approval. It plans to invite RFQ for the initial launch of 1.04msf of land
parcel, comprising hotels, entertainment and retail space. Currently expects land
monetization to start by end of FY11/early FY12.
MIAL is likely to commission Terminal-2 (international terminal) by October 2010,
which will further increase its traffic and cargo handling capacity from the existing
25.6m and 0.58mtpa, respectively.
Focus on attaining key milestones for new projects
GVK has awarded EPC contract for the 800MW Gautami Power Project (Rs32b),
with the target commissioning of the 1
st
unit by 1QFY13. Gas supply required for the
project would be applied to EGoM.
The project capacity can be further enhanced by 400MW, and the company is also
considering Jegarapadu Phase-II expansion of 800MW.
GVKPIL plans to focus on achieving financial closure for its recently awarded 690MW
Rattle Hydropower Project (cost estimated at Rs50b) in J&K and Kota-Deoli road
project (cost estimated at Rs8b). The management expects to achieve financial
closure of the road project by 2QFY11.
Valuation and view
We expect GVK to report net profit of Rs3.2b in FY11 (up 100%) and Rs5b in FY11 (up
58%). We maintain
Buy,
with a target price of Rs54.
SOTP Valuation
Project
Airports
Roads
Power
Others
- Oil & Gas Expl
- O&M business
- Investment in SEZ
Cash
Total
Equity Value
43,686
10,603
27,219
2,603
300
1,243
1,060
1,500
85,612
In %
51
12
32
3
0
1
1
2
100
Rs/sh
27
7
17
2
0
1
1
1
54
Covering Analyst(s):
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Nalin Bhatt
+91 22 3982 5429
NalinBhatt@MotilalOswal.com
August 2010
93

Sector:
Utilities
6th Annual Global Investor Conference
JSW Energy
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
JSW IN
1,640.1
125
4.4
133 / 100
-
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
EPS
YOY (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A
3/11E
3/12E
3/13E
23,551
56,045
84,011
77,848
7,631
13,941
19,838
16,713
4.7
8.5
12.1
10.2
-
82.7
42.3
-15.8
27.2
14.9
10.5
12.4
4.3
3.4
2.5
2.1
16.0
25.5
27.7
18.6
9.0
15.2
20.1
15.7
11.9
4.9
3.0
3.0
23.1
11.8
7.1
8.0
Company Represented By:
Mr Rajesh H. Asher,
Group Senior VP and IR
Ms Chandrika Nigam,
Jr Manager- Investor Relations
Key Takeaways
FY11 target: capacity of 3.4GW by year-end, FC of 2.92GW
Based on current timelines, the generation capacity is expected to reach 3.4GW by
FY11. During the year JSW Energy (JSWEL) is expected to commission 1.2GW in
Ratnagiri and 945MW in Raj West.
JSWEL plans to achieve financial closure and award equipment orders for
Chhattisgarh (1.32GW) and West Bengal (1.6GW) projects in FY11.
JSWEL will have ~40%+ of its capacity for merchant sales in FY11
Covering Analyst(s):
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Nalin Bhatt
+91 22 3982 5429
NalinBhatt@MotilalOswal.com
JSWEL will have ~1.3GW+ capacity for merchant sales in FY11, which will drive
earnings growth.
Spot purchase of 3-5mt coal
JSWEL will require 11-13mt of coal for its planned 3.4GW capacity. The company
expects 1.8mt of coal supply from Indonesia in FY11, which would increase to 4mt
in FY12/13.
After the current acquisition of SACMH ACMH, JSWEL will have an additional 1mt of
coal from South Africa.
Considering linkages for 540MW and coal supply sourcing from Indonesia/South
Africa (5mt), the shortfall in coal availability will be 3-5mt over FY12-13. The company
is looking to acquire other coal assets overseas to secure coal supply.
Progress on projects under development
For the 1.2GW Ratnagiri project, JSWEL has committed to put up fuel gas
desulphurisation equipment at an extra cost of Rs6b (13% of the project cost).
The 1.3GW Chattisgarh project land acquisition is in progress (200 acres acquired
out of 600 acres) and public hearing is expected by August 2010.
All the land required for the 1.6GW West Bengal project is in possession and PPA is
has been signed with the West Bengal Power Development Corporation (WBPDCL)
for 400MW. The mine plan has been approved and MoEF clearances received for
the Jalipa mine (expected to mine 5mt a year) and mine development is in progress
of the Kapurgdi mine (expected to mine 3mt a year).
Valuations and view
We expect JSWEL to post net profit of Rs13.9b in FY11 (up 83%) and Rs19.8b in FY12
(up 42%). At a CMP of Rs127, the stock trades at a PER of 15x FY11E and 11x FY12E.
Not Rated.
August 2010
94

Sector:
Utilities
6th Annual Global Investor Conference
Nuclear Power Corporation
Company Represented By:
Mr Jagdeep Ghai, Director Finance
Key Takeaways
Nuclear power addition in three phases; 1
st
phase addition of 10GW to be
undertaken by NPCIL
Based on current uranium reserves available in the country, India has the potential
to produce ~10GW of nuclear power (based on PHWR technology).
NPCIL is undertaking the stage-1 program, which comprises of operational 4,120MW,
under construction 2,660MW and sites approved for 2,800MW (of which project
awards from 1,400MW have commenced).
Long-term agreements with France, Russia, Kazakhstan
To meet demand from the planned nuclear generation capacity of 20GW by 2020
compared with 4.12GW currently, India will need uranium of 5,000 tonnes per annum
– a 10x increase from the current level.
India has signed long-term agreements with Areva (France), TVEL Corporation
(Russia), and Kazatomprom (Kazakhstan) for fuel supply to the existing and new
reactors under safeguards.
Generation costs largely comparable with imported coal-based thermal
projects
NPCIL estimates cost for setting up nuclear power projects at Rs60m-80m/MW and
construction time period of 5-6 years. PLFs demonstrated globally have been ~85%+.
Nuclear power plants in general have a shelf life of about 60 years. Hence, the fixed
costs are spread over a longer time frame, which enables tariffs of Rs2.5-Rs3.5/unit (in
line with thermal coal projects based on imported coal).
Nuclear liability bill heading towards consensus
The Parliamentary Standing Committee has incorporated several changes for smooth
passing of the Nuclear Liability Bill in the Parliament. Liability of the plant’s operator
has been fixed at Rs5b, the government’s at Rs23b, and no financial limit has been
set for the state in the event of a nuclear disaster.
The amended bill is expected to be placed before Parliament during the monsoon
session (August 2010).
Covering Analyst(s):
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Nalin Bhatt
+91 22 3982 5429
NalinBhatt@MotilalOswal.com
August 2010
95

Sector:
Utilities
6th Annual Global Investor Conference
Reliance Infrastructure
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
RELI IN
267.2
1,140
6.6
1,404 / 951
-9 / -2 / -19
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
EPS
YOY (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/09A
3/10A
3/11E
3/12E
96,965
100,273
116,350
145,916
9,081
11,517
13,322
16,526
34.0
43.1
49.8
61.8
22.0
26.8
15.7
24.1
32.9
25.9
22.2
17.9
2.4
1.9
1.6
1.4
10.2
9.1
8.6
9.4
9.0
8.6
9.7
10.4
2.4
2.3
1.8
1.3
27.5
20.9
16.4
12.3
Company Represented By:
Mr Lalit Jalan,
CEO & Whole Time Director
Mr Amit Jain, Head - IR
Mr Gautam Jain,
Manager - IR
Key Takeaways
Eleven infrastructure projects to contribute revenues in FY11 (v/s 2 in FY10);
project progress satisfactory
Eleven projects are expected to contribute to revenue in FY11 (project cost: Rs174b),
including six-laning of NHAI projects under Phase V, which entails toll collection
even during construction phase, two metro projects (Mumbai metro phase 1 and
Delhi metro) and WRSS transmission projects.
65% of work (right of way received for 95%) is complete on the Mumbai metro
phase 1 project and is expected to be commissioned by 1HFY12 and for road project
RELI is targeting a portfolio of Rs250b (up from Rs120b currently) by FY12.
Currently, Reliance Infrastructure (RELI) has a portfolio of 25 infrastructure projects
with total cost of Rs400b. These include roads (11 projects, Rs120b), metros (three
projects, Rs160b), transmission (five projects, Rs66.4b), the Mumbai sealink (Rs51b)
and the operating of five airports in Maharashtra.
Strong EPC order book position, Krishnapatnam UMPP order expected soon
The EPC division order book stands at Rs185b, and RELI is expected to book EPC
order to execute the Krishnapatnam UMPP project (likely order intake of Rs160b).
Financial closure for the project has been achieved and CERC has also approved a
change in project configuration.
The management has guided for revenues of Rs45b in FY11 (up 33% YoY), driven
by the execution of the Sasan UMPP project.
Manpower in the EPC division is ~1,600 (v/s 1,050 as at FY08) and RELI has developed
in-house competence for execution of power, roads, metros, and is adding
infrastructure projects like airports and ports.
Power sourcing arrangement for Mumbai region in final stages
RELI has secured 450MW of power required for its Mumbai region through a medium
term agreement at a tariff of Rs4.80+/unit. This compares with power procured by
the company at Rs7/unit currently through spot purchases. The power supply will
begin from April 2011 (315MW in the first year and 450MW from the second year).
RELI has invited bids for 1GW of LT power sourcing, for which it has received bids
from five parties for 2.5GW. The supply is expected to be commissioned by FY14
and tariff is Rs3-Rs4.50/unit.
Valuations and view
We expect RELI to post net profit of Rs13.2b in FY11 (up 15.5%) and Rs16.5b in FY12
(up 24%). At a CMP of Rs1,107, the stock trades at a PER of 22x FY11E and 18x FY12E.
We arrive at a SOTP based target price of Rs1,425.
Buy.
96
Covering Analyst(s):
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Nalin Bhatt
+91 22 3982 5429
NalinBhatt@MotilalOswal.com
August 2010

Sector:
Utilities
6th Annual Global Investor Conference
Reliance Power
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
RPWR IN
2,396.8
160
8.3
190 / 130
-13 / 0 / -19
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
EPS
YOY (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/09A
3/10E
3/11E
3/12E
0
345
12,529
27,522
2,445
4,251
10,572
14,024
1.0
1.8
4.4
5.9
148.7
32.7
154.9
92.3
37.1
28.0
2.7
2.8
2.6
2.4
1.8
3.0
7.2
8.8
1.8
3.0
4.9
3.7
0.0
0.0
869.7 2,922.0
40.5
26.7
83.8
57.4
Company Represented By:
Mr Kasturi Soundararajan,
Head - Investor Relations
Mr Ujjwal Das,
Mgr - Business Development
Key Takeaways
Financial closure achieved for a total capacity of 10GW, including the 4GW
Krishnapatnam UMPP
Financial closure of the 4GW Krishnapatnam Project has been achieved without
recourse to Reliance Power (on the lines of Sasan UMPP). DER for the project is
75:25 and cost of domestic debt is 11%. Also, CERC has approved the change in
project configuration from 800MW to 660MW which will allow Rpower use coal from
the mines acquired in Indonesia.
Financial closure is acheived for 10GW of capacity and is currently working on
achieving financial closure for the Chittrangi Power Project (4GW).
Merger of RNRL to aid backward integration
RNRL has been merged into Reliance Power to smoothen gas supply purchase
agreement and acquire priority status on gas allocation.
Also, the merger brings access to four coal bed methane (CBM) blocks with an area
of 351 acres, coal supply logistics, and shipping business.
Generation capacity of 1GW, ramp-up to 10GW by FY13
Rpower has acquired 433MW of capacity from Reliance Infra at Rs10.9b post which
the current operational capacity stands at 1GW (600MW of Rosa commissioned fully
in June 2010). Also, projects under construction now stand at ~9GW, which are
likely to be commissioned by FY13.
Projects lined up for commissioning by FY12 include Rosa Phase-II (600MW), Butibori
(600MW) and Sasan UMPP 1st unit (660MW). Commissioning of the balance units of
Sasan and Krishnapatnam UMPP would be spread over FY12/13.
The management expects capex of Rs100b in FY11 and Rs200b each in FY12/13.
300MW of Rosa and Butibori on merchant basis, Chitrangi Project to participate
in case-1 bids
Of the planned capacity addition of ~10GW, ~600MW would be sold on merchant
basis. The balance capacity is tied-up under case-1/case-2 bids.
For the Chittrangi Project, the capacity would be sold under case-1 bids and 1,220MW
is already sold to MPSEB. Reliance Power has also participated in the bids invited by
Reliance Infra for its Mumbai distribution business and has emerged as L1.
Valuation and view
Reliance Power is expected to report net profit of Rs10.5b in FY11 and Rs13.9b in
FY12. The stock trades at 40x and 30x FY11E and FY12E EPS.
Not Rated.
Covering Analyst(s):
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Nalin Bhatt
+91 22 3982 5429
NalinBhatt@MotilalOswal.com
August 2010
97

Sector:
Others
6th Annual Global Investor Conference
Havells India
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
HAVL IN
60.2
706
0.9
719 / 267
8 / 14 / 122
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
EPS
YOY (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/07A 15,422
03/08A 20,524
03/09A 21,999
03/10A 24,735
1,022
1,435
1,452
2,271
18.6
24.4
23.7
37.9
-25.7
31.1
-2.6
59.6
37.4
28.5
29.3
18.4
0.3
0.1
0.1
0.1
38.9
20.8
23.6
19.7
32.1
7.2
7.9
10.7
2.7
2.5
2.3
2.1
29.4
27.9
25.3
16.4
Company Represented By:
Mr Rajiv Goel - SR. VP Finance
Mr Sushil Singhal - AGM IR
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
Domestic outlook improving; management expects 20% sales growth in FY11
During 1QFY11, Havells’ revenues grew 22% YoY to Rs7.2b. Lightings and electrical
consumer durables, accounting for 14% and 17% of sales, respectively, grew 39%
each. Cables – wires and switchgears, accounting for 41% and 27%, respectively,
grew more moderately by 20% and 13%, respectively.
Growth outlook for the next couple of years appears very strong on the back of
strong pick-up in consumer electrical products and industrial sector. The company
expects to grow by 20% in FY11.
EBITDA margin was slightly lower during 1QFY11, at 11.1%, due to high cost material
(copper and aluminum) impacting margins in cables and wire business. Other
segments showed improvement in margins.
PAT grew moderately by 9% due to higher interest cost. The company has started
production at two new tax-exempt factories (Haridwar, Baddi) and will avail full tax
benefits in the next five years.
Sylvania to break even at PAT level in CY10
During 2QCY10, Sylvania grew by 6% in Euro terms, but declined by 10% in Rupee
terms. EBITDA margin was 4.5% v/s 0.7% in 2QCY09. The company made a marginal
loss of Rs24m during the quarter.
Sales in the Americas (30% of total) grew at a brisk 31% in Euro terms. In US Dollar
terms, growth was 20%. European sales (65% of total) declined 5%.
Sylvania has reported EBITDA of EUR13m in 1HCY10 on sales of EUR200m. The
company expects EBITDA for the full year to grow to EUR22m.
Of the restructuring projects, Project Phoenix has been completed at a total cost of
EUR12.33m. Project Prakram will be completed in Dec-10 and is expected to cost
EUR20m. These projects aim at reducing direct cost, material cost and headcount.
With recovery in the developed markets in FY12, Sylvania can post operating profit
of EUR30m, substantially boosting earnings growth during the year.
Sylvania’s net debt stood at EUR155m, of which EUR133m has recourse to Havells
India. Havells’ total exposure to Sylvania is EUR116m, including equity investment of
EUR50m, recourse debt and interest thereof, and guarantee on working capital.
Other key takeaways
Havells has a long-term growth objective of becoming India’s premier electrical
product company, with strong global presence. In pursuit of this, it is reviewing
various other growth options. Sylvania will continue to be a local company, with
limited outsourcing opportunity from India.
Havells is fully funded and does not have any fund raising plan in the near term.
Navneet Iyengar
+91 22 3029 5126
Navneet.Iyengar@MotilalOswal.com
August 2010
98

Sector:
Others
6th Annual Global Investor Conference
Jain Irrigation
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
JI IN
76.2
1,238
2.0
1,320 / 649
10 / 55 / 61
Key Takeaways
Company to benefit from drip irrigation
The drip irrigation industry is worth Rs25b and is growing at 35-40% CAGR. Jain Irrigation
is well placed to capitalize on this growth as it has 55% market share, well ahead of its
nearest competitor, which has a 15% share. The drip irrigation industry will continue to
grow in high double digits as the central government gives 40% subsidy and the state
government gives more than 20% subsidy.
PVC pipes growth to sustain
PVC pipes will maintain a 20% sales and profit growth. An increase in farm incomes will
boost demand for pipes. With polymer prices softening the company will benefit from
the PVC pipes business.
Processed foods segment to maintain growth
The processed foods segment is likely to be maintained at 15-20% CAGR in sales and
profits.
Capex of Rs3.5b-4b a year
The company is likely to incur a capex of Rs3.5-4b every year.
Company Represented By:
Mr Deepak Mundra, SVP - Fin
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Nikhil Kumar
+91 22 3029 5120
Nikhil.N@MotilalOswal.com
August 2010
99

Sector:
Others
6th Annual Global Investor Conference
Sintex Industries
Bloomberg
Equity Shares (m)
CMP (Rs)
Mcap (US$ b)
52 W Range (Rs)
1, 6, 12 Rel Per
SINT IN
135.5
361
1.1
384 / 190
10 / 26 / 51
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(RS) GROWTH (%)
SALES EBITDA
03/09A 31,332
03/10A 33,192
03/11E
40,934
3,057
3,045
4,166
5,293
22.6
22.5
30.8
39.1
40.9
-0.4
36.8
27.0
14.9
12.1
9.2
2.5
2.1
1.7
20.3
18.0
18.9
20.5
11.5
10.7
13.7
12.1
1.9
1.4
1.2
11.8
8.0
6.4
03/12E 49,435
Company Represented By:
Mr Amit Patel, MD
Mr Rajiv Naidu, Head - IR & PR
Key Takeaways
Sintex management continues to present an upbeat outlook for the company, both for
FY11 and FY12.
Robust PAT guidance
The management has guided for FY11 PAT of Rs4.4b-4.5b (our estimate: Rs4.2b)
and FY12 PAT of Rs5.6b-6b (our estimate: Rs5.3b).
The above guidance implies 30-35% reported PAT CAGR over FY10-12, in line with
our estimate of adjusted PAT CAGR.
Monolithics: Rs5b-6b incremental sales every year
Sintex is confident of adding Rs5b-6b of monolithic sales every year. Our estimates
factor in incremental sales of Rs4.3b in FY11 and Rs4.6b in FY12.
Demand outlook remains positive with steady flow of orders expected from
organizations like Border Security Force and Central Industrial Security Force.
Monolithic has become a well-accepted technology for mass housing. New players
such as L&T, Shapoorji Pallonji and B E Billimoria have entered the fray. However,
their structures use aluminum frames (mainly imported), which are not as cost
effective as Sintex's home-grown plastic frames.
Pre-fabs: 35-40% growth
On a low base of FY10 (given bottomed-out base telecom station shelter segment),
Sintex expects to grow pre-fabricated structures at 35-40%.
Growth is very high in new product segments such as agri sheds, cold chains and
industrial sites, in addition to steady growth in conventional segments such as rural
classrooms, health clinics and toilets.
Custom molding (i.e. composites): 20% growth led by India operations
In custom molding, India operations (Sintex standalone and Bright Autoplast) are
growing faster than international operations (Nief, France and Wausaukee, USA).
However, the synergies between the two have started working - India is getting
newer global clients. Names like ABB, Avaya, Alstom and Bombardier are potential
clients in addition to Schneider, to which Bright is already supplying electrical parts.
Valuation and view
Sintex trades at 12x FY11E and 9x FY12E EPS. This is attractive considering FY10-12E
adjusted EPS CAGR of 32% and FY12 RoE of over 20%. We value Sintex at 12x FY12E
EPS of Rs39.1 to arrive at a target price of Rs469, 30% upside from current levels.
Reiterate
Buy.
Covering Analyst(s):
Shrinath Mithanthaya
+91 22 3982 5421
ShrinathM@MotilalOswal.com
August 2010
100

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