Post Conference Report
featuring
CEO Track
13 CEO presentations
4 Thematic presentations
and
R
E-SHAPING
I
NDI
A
How
3C
will manage
3G
Company Connect
Takeaways from company
interactions

7th Annual Global Investor Conference
Index
CEO Track
Company
Infosys
Titan Industries
NTPC
Bajaj Auto
Tata Motors
ONGC
ICICI Bank
Bharti Airtel
CEO
Page
3
4
5
6
7
8
9
11
12
13
14
15
16
17
Mr S Gopalakrishnan,
Exec. Co-Chairman
Mr Bhaskar Bhat,
Managing Director
Mr Arup Roy Choudhary,
Chairman & MD
Mr Rajiv Bajaj,
Managing Director
Mr P M Telang,
Managing Director
Mr A K Hazarika,
Chairman & MD
Ms Chanda Kochhar,
MD & CEO
Mr Akhil Gupta,
Director;
Dy. Group CEO & MD, Bharti Enterprises
HDFC
Mr Keki Mistry,
Vice Chairman & CEO
ACC
Mr Kuldip Kaura,
CEO & MD
Idea Cellular
Mr Himanshu Kapania,
MD
Zee Entertainment
Mr Punit Goenka,
MD & CEO
Hindustan Unilever
Mr Nitin Paranjpe,
MD & CEO
Havells India ...............................................................................
Larsen & Toubro .........................................................................
Suzlon Energy .............................................................................
VA Tech Wabag ..........................................................................
Voltas .........................................................................................
FMCG
Bajaj Corp ..................................................................................
Dabur India ................................................................................
Emami .........................................................................................
Hindustan Unilever .....................................................................
ITC .............................................................................................
Marico ........................................................................................
Pidilite Industries ........................................................................
Radico Khaitan ............................................................................
Information Technology
Financial Technologies India ........................................................
Info Edge India ..........................................................................
Infosys .......................................................................................
TCS ............................................................................................
Wipro .........................................................................................
Infrastructure
Ashoka Buildcon .........................................................................
Dedicated Freight Corridor Corpn (DFCC) ...................................
NCC ............................................................................................
Simplex Infrastructures ..............................................................
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
Thematic Presentations
Black Money: The Trail of India's Hidden GDP
Prof Arun Kumar,
Author "India's Black Economy" and
Professor at Jawaharlal Nehru University
India Insights: Through the lens of a film-maker
Mr Prakash Jha,
Multiple National Award Winning Film-maker
India's Troubled Neighborhood: National Security Challenges
General Ved Prakash Malik
(Retd), Chief of Indian army
during Kargil war
Macro-economic Challenges: The RBI Perspective
Dr K C Chakrabarty,
RBI Deputy Governor
19
20
Media
Dish TV India .............................................................................. 76
HT Media .................................................................................... 77
Zee Entertainment Enterprises .................................................... 78
Metals
Hindalco Industries .....................................................................
Hindustan Zinc ............................................................................
Jindal Steel & Power ...................................................................
JSW Steel ...................................................................................
Tata Steel ...................................................................................
Oil & Gas
BPCL ...........................................................................................
HPCL ..........................................................................................
Oil India ......................................................................................
ONGC .........................................................................................
Reliance Industries .....................................................................
Pharmaceuticals
Biocon ........................................................................................
GlaxoSmithKline Pharma ..............................................................
Glenmark Pharma ........................................................................
Lupin ..........................................................................................
Opto Circuits India ......................................................................
Sun Pharma ................................................................................
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
22
Company Connect: Conference Takeaways
Sector/Company
Page
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
Automobiles
International Tractors/Sonalika ...................................................
Mahindra & Mahindra ..................................................................
Maruti Suzuki India .....................................................................
Popular Group .............................................................................
Tata Motors ................................................................................
Banking, Finance & Insurance
Axis Bank ...................................................................................
Bank of India ..............................................................................
Canara Bank ...............................................................................
Central Bank of India ..................................................................
Dewan Housing Finance Corp .....................................................
Federal Bank ..............................................................................
HDFC ..........................................................................................
HDFC Bank .................................................................................
ICICI Bank ..................................................................................
IDBI Bank ...................................................................................
IDFC ...........................................................................................
IndusInd Bank ............................................................................
ING Vysya Bank ..........................................................................
Kotak Mahindra Bank ..................................................................
Manappuram Finance ..................................................................
Muthoot Finance ........................................................................
Rural Electrification Corp ............................................................
Shriram Transport Finance Co .....................................................
State Bank of India .....................................................................
UCO Bank ...................................................................................
Yes Bank .....................................................................................
Real Estate
DLF ............................................................................................ 95
Jones Lang LaSalle ..................................................................... 96
Retail
Pantaloon Retail India ................................................................. 97
Shoppers Stop ............................................................................ 98
Titan Industries .......................................................................... 99
Telecom
Bharti Airtel .............................................................................. 100
IDEA ......................................................................................... 101
Reliance Communications .......................................................... 102
Utilities
Aryan Coal ...............................................................................
CESC ........................................................................................
NTPC ........................................................................................
Reliance Infrastructure .............................................................
103
104
105
106
Cement
Grasim/UltraTech ........................................................................ 51
Engineering
AIA Engineering ......................................................................... 52
BGR Energy Systems .................................................................. 53
Others
Jain Irrigation Systems ............................................................. 107
Raymond .................................................................................. 108
Other Participating Companies:
ARCIL, Au Financiers, Carborundum Universal, Container Corporation of India, Cox & Kings, GMR Infra,
ICRA, Mrs Bector Foods, Oberoi Realty, Parag Milk, Pipavav Defence & Offshore, Sintex Industries.

7th Annual Global Investor Conference
Conference Highlights
T
HE INDIAN ECONOMY has been facing several headwinds in the form of high oil
prices, unrelenting inflation, rising interest rates, earnings downgrade cycles and
governance issues. These factors have led to a significant fall in Indian equities,
putting the Indian stock market among the worst performing markets in CY11. This has
had an impact on FII inflows, which have been marginally negative in YTD CY11 after
inflows of over USD20b in each of the preceding two years. All this has led to valuations
turning attractive, pushing them below their long-term averages. The prospects of a higher
share of domestic savings in equities will be a key positive as India achieves the Second
Trillion Dollar GDP in FY12. It was against this backdrop that we hosted the 7th Motilal
Oswal Annual Global Investor Conference, 22-24 August 2011, at the Grand Hyatt in Mumbai.
The
Motilal Oswal Annual Global Investor Conferences
in 2009 and 2010 were
arguably the biggest in India. In 2011 we maintained this trend of hosting the largest India
conference of the year. During 22-24 August, over 100 leading Indian companies interacted
with more than 500 investors from all over the world, translating into 2,500+ company-
investor meetings. Over the remaining two days (25-26 August) we had very successful
visits to Gujarat, Delhi and Bihar, where a large group of investors interacted with the
Chief Minister of Gujarat, the Deputy Chief Minister of Bihar and several state and central
government officials.
CEO Track:
During the first two days of the conference 13 CEOs of India's leading
companies shared their vision, strategies and success stories.
Four thematic presentations:
There were four thematic presentations by eminent
personalities on a diverse range of themes:
1.
Dr K C Chakrabarty,
Deputy Governor, RBI had an interactive session with investors
on "Several Macroeconomic Issues".
2.
General VP Malik (Retd),
Chief of the Indian Army during the Kargil War discussed
his views on "National Security Challenges".
3.
Mr Prakash Jha,
reputed film-maker and six times National Award winner, provided
"India Insights" (key social issues) through his lens.
4.
Prof Arun Kumar,
of JNU, and author of the book, "Black Economy", shared his
knowledge on "India's Hidden GDP".
Two luncheon panel discussions:
On each of the first two days there was a panel
discussion over lunch. On Day 1, the topic was "Indian
Entrepreneurship:
Exponential Growth Engine",
and on Day 2 it was "Indian
Financial Services:
Diversity & Opportunities".
The panelists were leading CEOs across sectors.
Re-shaping India!
As India slowly, silently and dramatically awakes to the challenges of
governance and inclusive growth, the three Cs (central government, corporates and civil
society) will manage 3G (global headwinds, governance and growth). We hope the
conference lived up to its theme, leaving investors with interesting insights, winning themes,
greater conviction and the best investment ideas.
We will host the 8th Motilal Oswal Annual Global Investor Conference in August
2012.
We look forward to your participation in that event.
Navin Agarwal
CEO - Institutional Equities
August 2011
Rajat Rajgarhia
Director - Research
1

7th Annual Global Investor Conference
CEO Track
Company/Thematic presentations
Company/CEO
Infosys
Titan Industries
NTPC
Bajaj Auto
Tata Motors
ONGC
ICICI Bank
Bharti Airtel
Mr S Gopalakrishnan,
Executive Co-Chairman
Mr Bhaskar Bhat,
Managing Director
Mr Arup Roy Choudhary,
Chairman & Managing Director
Mr Rajiv Bajaj,
Managing Director
Mr P M Telang,
Managing Director
Mr A K Hazarika,
Chairman & Managing Director
Ms Chanda Kochhar,
MD & CEO
Mr Akhil Gupta,
Director;
Deputy Group CEO & MD, Bharti Enterprises
HDFC
ACC
Idea Cellular
Zee Entertainment
Hindustan Unilever
Mr Keki Mistry,
Vice Chairman & CEO
Mr Kuldip Kaura,
CEO & Managing Director
Mr Himanshu Kapania,
Managing Director
Mr Punit Goenka,
MD & CEO
Mr Nitin Paranjpe,
MD & CEO
Thematic presentations
Black Money: The Trail of India's Hidden GDP
Prof Arun Kumar,
Author "India's Black Economy"
and Professor at Jawaharlal Nehru University
India Insights: Through the lens of a film-maker
Mr Prakash Jha,
Multiple National Award Winning Film-maker
India's Troubled Neighborhood: How Much to Worry
General Ved Prakash Malik
(Retd), Chief of Indian army during Kargil war
Macro-economic Challenges: The RBI Perspective
Dr K C Chakrabarty,
RBI Deputy Governor
August 2011
2

7th Annual Global Investor Conference
Infosys
Mr S Gopalakrishnan
Executive Co-Chairman
Infosys
Mr S Gopalakrishnan
is the
Executive Co-Chairman of Infosys.
Before assuming his current office in
July 2007, he served as Infosys' Chief
Operating Officer, President and
Joint Managing Director, responsible
for customer services, technology,
investments and acquisitions.
One of the founders of the company,
Mr Gopalakrishnan served as Director
(Technical)
and
his
initial
responsibilities included the
management
of
design,
development, implementation, and
support of information systems for
clients in the consumer products
industry in the US.
Mr Gopalakrishnan has represented
Infosys and India in international
forums such as: The Indo-US CEO
Council, President's Council of New
York Academy of Sciences, and
Member of UNESCO High Level Panel
on Women's Empowerment and
Gender Equity. He is Chairman of The
Business Action for Sustainable
Development 2012 (BASD), a
coalition of international business
groups committed to sustainable
development. In January 2011, the
Government of India awarded Mr
Gopalakrishnan the Padma Bhushan,
India's third highest civilian honor.
CEO Track
Key Takeaways
Core essence:
Any impact of global headwinds on the industry will only persist in the
short run; growth rates are likely to sustain over the medium to long term.
Industry insights
Compared to 2008, businesses are better prepared now to respond to any global
meltdown. Companies had already braced themselves for a slow, gradual recovery
rather than a quick turnaround. Macro-led impact on business will be short-lived.
The long-term picture is positive, given new areas of opportunity.
The industry will continue to witness double-digit growth over the medium to long
term, given multiple levers around new markets and new solutions.
Company vision and strategy
Focus to return to clients after restructuring:
Infosys is prepared to cater to
the next wave of growth in the industry. With the restructuring process behind,
focus will be fully channelized to the clients.
To be more relevant to clients:
The company will look to be more relevant to
clients in trying to help them build tomorrow's enterprises by focusing on themes
around which the clients will seek growth: [1] emerging markets, [2] sustainability,
[3] mobility, [4] healthcare, and [5] social networking.
Focus on Consulting and Non-linear growth:
Infosys intends to continue focusing
on the Consulting/SI segment (~30% of revenue) and growth in the Non-linear
segment will be a thrust area. Revenue from platform-based/Cloud streams may
be small to start with, but afford greater visibility over the long run. The company
currently derives ~8.5% of its revenue from the Non-linear segment.
Productivity improvement to be the focus in Operations segment:
The
global delivery model offers little scope for differentiation. Business IT Services
(ADM, BPO, IMS; ~61% of revenue), will struggle to see higher growth in rates.
Here, Infosys will try to leverage technology to increase revenue productivity.
Key triggers/milestones/challenges
~25% of Infosys' clients and ~50% of its top-50 accounts engage with the company
in Consulting/SI services. Infosys' SI component involves very little pass-throughs,
differentiating it from competition and helping it to achieve superior revenue quality.
As employee costs continue to grow by 8-12% every year, Infosys will need to de-
link its revenue growth from employee growth, by focusing on non-linear revenues.
The company continues to expand its global delivery network by penetrating into
countries like China, Germany, France, Mexico, Brazil and Costa Rica.
While Infosys will be hiring more employees onsite, lower utilization at onsite could
impact its margins. It will seek to achieve this by increasing the Consulting/SI
engagements onsite, where utilization is typically lower.
3
Covering Analyst(s):
Ashish Chopra
+91 22 3982 5424
Ashish.Chopra@MotilalOswal.com
August 2011

7th Annual Global Investor Conference
Titan Industries
Mr Bhaskar Bhat
Managing Director
Titan Industries
CEO Track
Mr Bhaskar Bhat
is the Managing
Director of Titan Industries. He has
been associated with the Tata Watch
Project, which later became Titan
Watches Limited, and is now Titan
Industries Limited, since 1983.
He is a BTech (Mechanical
Engineering) from IIT Madras (1976)
and completed his Post Graduate
Diploma in Management from IIM
Ahmedabad (1978). Most of his
working experience has been in sales
& marketing. He started work as a
Management Trainee at Godrej &
Boyce in 1978. After spending five
years there, he joined the Tata
Watch Project, which was initiated
at Tata Press Limited. He has handled
sales & marketing, HR, international
business and general managerial
assignments at Titan, and became
Managing Director in April 2002.
Mr Bhat is a member of the Governing
Council at the TA Pai Management
Institute, Manipal and the SDM
Institute of Management and
Development, Mysore. He was
appointed Chairperson of the Board
of Governors at the National
Institute of Technology established
in Uttarakhand. He is also Director
at Virgin Mobile India Limited, a joint
venture of Tata Teleservices and the
Virgin Group, UK.
Key Takeaways
Core essence:
Titan Industries is best placed to capture the growing demand in the
Indian lifestyle consumption space, led by rising income levels and demographic dividend.
Industry insights
There are nearly 25 luxury watch brands in India, but only a few brands in the mid
segment are highly profitable.
India does not have any large established jewelry brands as against quite a few in
China. This increases the attractiveness of the Indian market.
The Eyewear business offers huge opportunity to change in a large and under-
serviced market.
In Jewelry, Titan has ~5% market share, led by migration from small and local
players; 60% of its customers are repeat customers.
Company vision and strategy
Sales likely to touch INR140b by FY15; Jewelry sales likely to be INR100b.
Helios is likely to be a key growth driver in Watches; being the only format by any
brand owner globally, selling watches of other brands. Titan plans to have 100
stores in two years and lead the development of the premium and luxury watch
market in India.
Titan plans to play across the value chain, from manufacturing to branding to retailing,
so as to capture the value at every end.
Titan has 177 Eyewear stores and plans to increase these to 300 in another two
years. Its long-term plan is to take the number of its stores to levels similar to US
eyewear retailers that have even 1,500 stores.
The company does not have any plans to sell watches in developed markets due to
low growth and profitability.
Key triggers/milestones/challenges
Titan is cautious on near-term demand due to rising interest rates - while demand
growth in Jewelry is intact, demand for watches might suffer. Overall growth rates
in 2Q are lower, post unprecedented high growth in 1QFY12.
The company is positive on demand in the premium end, as LTL sales growth of
watches in departmental stores has increased by 26%.
The company plans to end the current year with sales exceeding INR1b for Precision
Engineering, with positive bottomline contribution.
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Harit Kapoor
+91 22 3029 5120
Harit.Kapoor@MotilalOswal.com
August 2011
4

7th Annual Global Investor Conference
NTPC
Mr Arup Roy Choudhury
Chairman & Managing Director
NTPC
Mr Arup Roy Choudhury
is
Chairman and Managing Director of
NTPC. Since he assumed this office
on 1 September 2010, he has taken
several steps to make NTPC a world-
class organization. Mr Roy
Choudhury has worked in prominent
public and private sector companies
since 1979. He became the youngest
CEO of a Central Public Sector
Enterprise (CPSE) at the age of 44
years when he joined National
Buildings Construction Corporation
Limited on 3 April 2001 as Chairman
and Managing Director. He is a
graduate in Civil Engineering from
Birla Institute of Technology, Mesra
and a Post Graduate in Management
and Systems from IIT Delhi.
Mr Roy Choudhury is Chairman, for
the second consecutive term,
commencing April 2011, of the
Standing Conference of Public
Enterprises, the apex forum of the
Central Public Sector Enterprises in
India and a permanent invitee on the
Board of Reconstruction of Public
Sector Enterprises, a forum engaged
in turning around underperforming
CPSEs.
CEO Track
Key Takeaways
Core essence:
Converting challenges into opportunities; capacity addition of 93GW
over the next 20 years v/s 35GW in the past 35 years.
Industry insights
Energy demand in India has grown at a CAGR of 5.5%, vs average GDP growth of
7% over FY03-11. Over FY11-17E, demand grow expected at 7.5%.
The Transmission and Distribution (T&D) sector needs high focus, given ~28.5% of
AT&C losses, limited open access, and high SEB losses.
India produced 490mtpa of coal, with proved reserves of 106b tons v/s 2761mtpa
production by China, with proved reserves of 110b tons.
Financing of new projects, equipment supplies (lead time) and statutory clearances
are key execution bottlenecks
Company vision and strategy
93GW addition over next 20 years, 30GW in next 5 years:
NTPC plans to
attain capacity of 128GW by 2032, an addition of 93GW over the next 20 years v/s
35GW in the past 35 years. Target to reach 67GW of installed capacity by FY17
(30GW in 5 years). 40GW of projects are under various stages of execution.
Multi-pronged approach to overcome challenges:
Key initiatives taken include:
(a) bulk tendering, (b) delegation of power to enable quick decision, (c) project
monitoring cell at corporate office, (d) limited notice to proceed to project construction
adopted, and (e) land acquisition cell established at the corporate center.
Insulating fuel risk:
FY12 coal requirement of 164m tons will be met from domestic
linkages (135m tons), bilateral contracts (5m tons) and imports (23m tons), indicating
blending of 14%. Long-term coal supply is being augmented by (a) pursuing linkages
for new projects, (b) developing captive coal mines - target to produce 47mtpa by
FY17, and (c) acquisition of coal blocks overseas /LT imports.
Key triggers/milestones/challenges
Bulk tendering:
Plans to conclude ordering by end FY12 would help improve visibility
on 12th Plan period capacity addition.
Captive coal block:
NTPC is pursuing restoration of de-allocated coal blocks with
the help of Ministry of Power and continuing development on blocks. Plans to produce
2.3m tons of coal from Pakri Barwadih mines in FY13.
Payment security high:
NTPC has been receiving 100% of dues from the customer
for eight successive years, as it is covered under tri-partite agreement till 2016.
Capacity to drive efficiency/profitability:
Man/MW ratio has gone down from
0.89x in FY07 to 0.77x in FY11, while PAT/employee has improved from INR29m in
FY07 to INR38m in FY11. Man/MW ratio would further decline to 0.5x.
5
Covering Analyst(s):
Satyam Agarwal
+91 22 3982 5410
Agarwals@MotilalOswal.com
Nalin Bhatt
+91 22 3982 5429
Nalin Bhatt@MotilalOswal.com
Vishal Periwal
+91 22 3982 5417
Vishal.Periwal@MotilalOswal.com
August 2011

7th Annual Global Investor Conference
Bajaj Auto
Mr Rajiv Bajaj
Managing Director
Bajaj Auto
Mr Rajiv Bajaj,
Managing Director
of Bajaj Auto, graduated first in class,
with distinction, in Mechanical
Engineering from the University of
Pune in 1988, and then completed
his masters in Manufacturing
Systems
Engineering,
with
distinction, from the University of
Warwick in 1990.
He has since worked at Bajaj Auto in
the areas of manufacturing and
supply chain (1990-95), R&D and
engineering (1995-2000), marketing
and sales (2000-05) and has been
its Managing Director since April
2005.
His current priority is the application
of the scientific principles of
homoeopathy to the task of building
a brand centered strategy at Bajaj
Auto with the objective of achieving
its vision of being one of the world's
leading motorcycle manufacturers.
Mr Bajaj has been on the Board of
Bajaj Auto since March 2002. He is
also on the Boards of Bajaj Auto
Finance and Bajaj Auto Holdings.
CEO Track
Key Takeaways
Core essence:
Create a market position, rather than chase a slice of the existing
market. Lead with the right brand and the brand will lead you.
Industry insights
Focus on 4P's:
The motorcycle industry can be understood on 4Ps - Position, Product,
Performance and Price. Product differentiation can be limited, performance is a given,
and market drives pricing. Thus, only controlable factor is positioning of the product.
On new competition:
Difficult to comment till Honda's product launch plans are known.
However, as media reports suggest, its probability of success would be limited if their
low cost 100cc bike targets existing products. Honda's past launches of 4-5 motorcycles
were not successful (except Honda Shine), as targeted towards existing segment.
Company vision and strategy
Continued focus on segment creation in domestic market:
It continues to focus
on creating new segments in the domestic market, based on the principle that curiosity
excites and not familiarity. Its to-be-launched Boxer 150cc is aimed at creating a new
segment in rural markets, with high performance but plain looks and a very competitive
price of ~INR42,000 as very few parts are different from its existing product.
Adaptation and specialization:
It believes in adaptation. It has adapted to an evolving
market, where it lost its dominance in scooters, by specializing in motorcycles and
sacrificing its plant and retrenching people. It spent ~INR10b to close the plant and
offer VRS. Its specialization in motorcycles has enabled it to align its back-end and
front-end to leverage its product platform, driving smart recovery in performance.
Region-specific export strategy:
It started with exports to neighboring markets
that were similar to India, like the ASEAN market and then explored similar markets like
Indonesia, which were more competitive. In Indonesia, it tied up with Kawasaki to
leverage its distribution network to sell Pulsar and Discover. For the African market,
where it faces Chinese competition, it is engaging an offense strategy of creating brands
and selling at premium, which has enabled it to become the market leader. To penetrate
more evolved market like Brazil, it plans to use KTM's brand and network.
Key triggers/milestones/challenges
Four-wheeler launch in FY13; not focused on cars:
Its four-wheeler project, which
started as an ultra-low cost car in partnership with Renault-Nissan, has evolved from
the skill sets and cost structure of a two/three-wheeler maker. While it did not disclose
its strategy for four-wheelers, it plans to to evolve its three-wheelers to four-wheelers.
Leveraging KTM investment:
It plans to align KTM's frontend and Bajaj's backend to
penetrate Brazil & other developed markets. It has initiated production of KTM 125cc in
India and plans to export ~12,000 units in FY12.
6
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Mansi Varma
+91 22 3982 5418
Mansi.Varma@MotilalOswal.com
August 2011

7th Annual Global Investor Conference
Tata Motors
Mr Prakash Telang
Managing Director
Tata Motors
CEO Track
Mr Prakash Telang
is Managing
Director of Tata Motors' India
operations. He was Executive
Director (Commercial Vehicles) since
May 2007, and he assumed his
current role on 2 June 2009.
He joined the Tatas through the
prestigious TAS (Tata Administrative
Service) cadre, after spending the
first three years of his career with
Larsen & Toubro. Ever since, he has
been with the group. He is
responsible
for
product
development, manufacturing, sales
and marketing of the strategic
business unit of light and small
commercial vehicles.
Mr Telang holds a Bachelor's in
Mechanical Engineering and is an
MBA from IIM, Ahmedabad. He has
over three decades of functional
expertise in the automobile industry
and machinery manufacturing.
Key Takeaways
Core essence:
For the CV industry, CY10 marks an inflection point, with markets
poised for recovery after recession. The Indian passenger car industry is likely to witness
strong growth over the next 10 years.
Industry insights
The growth drivers supporting automobile demand, namely (a) increasing
urbanization, (b) growing working population, (c) growth in GDP and rise in disposable
incomes, (d) improvement in road infrastructure, remain in place and should sustain.
For the CV industry, even if economic conditions worsen, an FY09-10-like volume
decline is unlikely. This is because unlike FY09-10, availability of finance is good
despite increase in interest rates, which is critical for CV demand.
Improvement in road infrastructure and establishment of hub-and-spoke model would
ensure strong demand for M&HCVs and LCVs.
Commercial vehicles
The CV industry in India is likely to continue its strong growth in the high volume
segments, with a CAGR of 11% over FY10-15.
There would be a shift towards higher tonnage tractors and multi-axle trucks; tippers
would continue to contribute significantly towards total sales.
The small CV industry should see volume CAGR of 8% over FY11-15 to 0.29m units,
with the contribution of micro-trucks increasing from 17% in FY11 to 40% in FY15.
Passenger cars
The Indian passenger car market is likely to grow faster than the top-5 global
markets, at a CAGR of 12-15% to 7m-9m units.
Hatchbacks will continue to dominate the market in 2020. Volumes in this segment
are likely to grow, driven by increased offerings by international OEMs complemented
by a growing middle-class population.
SUV sales are likely to increase from 0.2m units in FY10 to 0.57m-0.62m units by
FY21 and MPV sales from 0.17m to 0.8m-0.9m units, driven by the mid-end segments
for UVs and MPVs.Entry UVs currently cater to rural customers; however, there is
growing demand for smaller trendy SUVs for the urban youth.
While the entry-level MPVs are the biggest segment (expected to reach ~0.4m units
by FY21), the mid-price MPVs are likely to grow faster due to higher urban demand.
The rural market is likely to grow at a CAGR of 16% primarily due to increase in the
number of households and 2.5x growth in consumption levels. While tier 2-3 cities
are would grow at 12% CAGR, the metros and tier-I cities would grow at 11% CAGR
over FY10-21.
7
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Mansi Varma
+91 22 3982 5418
Mansi.Varma@MotilalOswal.com
August 2011

7th Annual Global Investor Conference
ONGC
Mr Ajit Kumar Hazarika
Chairman & Managing Director
ONGC
Mr
Ajit
Kumar
Hazarika,
CEO Track
Chairman and Managing Director of
Oil and Natural Gas Corporation
(ONGC), has over three-and-a-half
decades' experience in the upstream
oil and gas business. A Mechanical
Engineer, he joined ONGC in 1976
and joined the ONGC Board as
Director (Onshore) in September
2004. He assumed his current office
on 1 February 2011 in addition to
the responsibilities of Director
(Onshore).
He is also Chairman of ONGC Videsh
Limited (OVL), Mangalore Refinery
& Petrochemicals Limited (MRPL) and
six other ONGC Group companies
(OPaL, OMPL, MSEZ, OTPC, OMEL
and OTBL).
Mr Hazarika, Chairman of Petrotech
Society, is also a member of the
Governing Council of Petrofed. He is
Chairman of the Working Group for
UCG
(Underground
Coal
Gasification) constituted by the
office of Principal Scientific Advisor,
Government of India and Indian
representative of the Oil & Gas Sub-
committee of International M2M
(Methane to Market) partnership
under
the
United
States
Environment Protection Agency,
nominated by the Ministry of
Petroleum & Natural Gas.
Key Takeaways
Core essence
Positive on government policy changes, which will be favorable to the sector and
the company, primarily due to increased awareness of negative impact of ad-hoc
subsidy burden.
Expects the government to limit upstream subsidy sharing at 33%.
Current global economic uncertainty could weaken oil price, which would be good
from the under-recovery perspective.
Industry insights
Global oil demand growth of 2.4% in 2010 was the second highest in the last 30
years, primarily led by emerging markets.
Domestic oil production increase in FY11 limited the increase in oil imports.
Nevertheless, import dependency remains high at ~77%.
Company vision and strategy
Increasing E&P expenditure in its large domestic acreage.
Continued IOR/EOR activities to sustain current production. ONGC has a commendable
record of maintaining production as against 9% decline witnessed in mature non-
OPEC fields.
Looking at increase in oil and gas production through marginal field development,
which will become economically feasible at higher oil and gas prices.
Key triggers/milestones/challenges
Likely subsidy rationalization by government.
Expect one-time gain post resolution of royalty issue with Cairn India.
APM gas price hike in the medium to long term.
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
August 2011
8

7th Annual Global Investor Conference
ICICI Bank
Ms Chanda Kochhar
Managing Director & CEO
ICICI Bank
CEO Track
Ms Chanda Kochhar
is the
Managing Director and CEO of ICICI
Bank. She began her career with
ICICI as a Management Trainee in
1984 and has risen through the
ranks, handling multidimensional
assignments and heading all the
major functions in the bank.
She is widely recognized for her role
in shaping India's retail banking
sector and for her leadership of the
ICICI Group. She took on the
challenge of building the nascent
retail business, with strong focus on
technology, innovation, process
reengineering and expansion of
distribution and scale.
Ms Kochhar led ICICI Bank's
corporate and international banking
businesses during a period of
heightened activity and global
expansion by Indian companies. She
was the Joint Managing Director &
Chief Financial Officer during a critical
period of rapid change in the global
financial landscape.
Ms Kochhar is a member of the Prime
Minister's Council on Trade &
Industry, US-India CEO Forum and
UK-India CEO Forum. She was
conferred with the Padma Bhushan
in 2011.
Key Takeaways
Core essence
To accelerate growth, with focus on 5Cs (Credit growth, CASA ratio, Cost efficiency,
Credit quality and Customer centricity).
To enhance RoA from current level of 1.4% on the back of improved liability structure
and leverage capital better by resuming growth; standalone RoE to increase to 14-
15% in FY13.
Targets 14-15% consolidated RoE in FY12.
Industry insights
Inflationary pressures still persist in the economy, with manufacturing inflation also
moving up. ICICI Bank expects inflation to decline from October on the back of a
favorable base. Interest rates are near the peak and the bank expects some stability
now.
New sanctions have come down due to various macroeconomic factors. However,
the current level of sanctions will drive growth at least for the next 12-18 months.
Asset quality remains largely stable and no significant stress is seen so far. Retail
asset quality remains strong and large corporate loans are doing well, though there
might have been some segment-specific issues in SME loans. Corporates have a
much larger scale of operations as compared to the 1990s and are better positioned
to take higher interest rates. Project-specific modalities will have to be looked at to
judge infrastructure asset quality and it may not be correct to take a generalized
view.
Focus on efficiency, superior customer service and quality growth will remain the
keys to success. Large private sector banks will continue to have an advantage.
If the savings rate is deregulated, the management expects other charges also to
be deregulated, which will keep profitability intact.
Company vision and strategy
Focused 5Cs strategy and quality growth:
ICICI Bank will continue to focus on
its 5Cs strategy and quality growth. The management mentioned that at current
RoA of 1.4%, there is some room for improvement from margins, opex and lower
provisions.
Credit growth:
Balance sheet growth is likely to be ~18%, with equal contribution
from domestic and overseas business. Within the domestic business, corporate
loans (project finance, working capital financing) and secured retail loans (auto and
home loans) remain areas of focus. High domestic interest rates are leading to
higher arbitrage on the international front, which is fuelling international loan growth.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
August 2011
9

7th Annual Global Investor Conference
ICICI Bank (continued)
Cost efficiency:
Operating expenses are likely to grow 20% due to (a) increase in
headcount from 43,000 to 60,000 employees, (b) wage increase of 11% in FY11, (c)
increase in branch network to 2,500+ (up 25%+). Overall, ICICI Bank expects to maintain
cost to average assets at 1.7% and cost to income ratio at 40-42% on long-term basis.
CASA:
Focus remains on retail liability driven growth strategy. CASA deposits are likely
to grow in line with overall growth. The bank expects to maintain CASA ratio at 40% for
the long term.
Credit quality:
Credit quality is gradually improving, with net accretion to NPAs coming
down and the management does not expect any issues in the near future. About 60% of
its power exposure is to entities with own coal mines and the rest 40% is to entities that
have coal linkages in place. Restructured loans declined to INR19.7b from INR37.4b YoY.
The management continues to guide credit cost of 80bp for FY12 and expects to maintain
this over the long term.
Customer centricity:
Focusing on enhancing customer service capability and leveraging
on branch network to acquire new customers.
Focused on de-risking the portfolio
ICICI Bank, UK has scaled down investments in bonds/notes of financial institutions
from USD2.1b as of 1QFY10 to USD640m as of 1QFY12. It does not have any exposure
to peripheral European countries.
Credit derivative exposure (including off balance sheet) has been scaled down to
INR21.3b from INR54.1b. In case of derivative exposure, the underlying comprises of
Indian corporates.
Domestic subsidiaries impacted by regulatory changes:
Regulatory headwinds coupled
with tough market conditions impacted Insurance, Asset Management and Securities
businesses. ICICI Bank remains committed to building the franchise in various businesses to
capitalize its long-term growth potential. Consolidation of operations remains a mantra for
overseas subsidiaries in view of changing regulations.
Other highlights
Overseas margins are likely to improve from 90bp as of 1QFY12 to 125bp by the end of
the year, led by re-pricing on the liability side. The management expects domestic
margins to remain at current levels. However, there remains an upward bias in FY13,
led by fall in securitization losses. For FY12, it expects NIM of 2.6%.
Fee income growth is likely to remain in line with asset growth, with focus on transaction
banking, forex/derivatives and remittance fees. However, growth in corporate fees would
depend on movement in new project announcements and financial closures.
Key triggers/ milestones/challenges
Managing quality growth is a key challenge in the current uncertain macroeconomic
scenario.
There would be no immediate unlocking of value from Insurance business, considering
change in regulatory environment. Further, as the Insurance business is profitable, it
does not need fresh capital.
August 2011
10

7th Annual Global Investor Conference
Bharti Enterprises
Mr Akhil Gupta,
Dy Group CEO & Managing Director
Bharti Enterprises
CEO Track
Mr Akhil Gupta
is Deputy Group
CEO and Managing Director of Bharti
Enterprises and a Director at Bharti
Airtel. He spearheaded the group's
transformational initiatives including
outsourcing deals in the areas of
information technology (IT) with IBM,
network management with Ericsson
and Nokia and outsourcing of call
center management to leading
international
BPOs.
He
conceptualized and implemented the
separation of passive mobile
infrastructure and formed Indus
Towers, a JV with Vodafone and
Idea, the largest tower company in
the world.
In June 2010, Mr Gupta was
instrumental in executing the
acquisition of the Zain Group's mobile
operations in 15 countries in Africa
for an enterprise valuation of
USD10.7b, the second largest
outbound deal by an Indian
company. For this, he was awarded
the Asia Corporate Dealmaker
Award at the Asia-Pacific M&A Atlas
Awards in September 2010.
He led the formation of partnerships
for Bharti with leading international
operators like British Telecom,
Singapore Telecom and most recently
Vodafone, besides the induction of
financial investors like Warburg
Pincus, Asia Infrastructure Fund and
New York Life.
Key Takeaways
Core essence:
The Indian telecom sector is at a turning point, with increasing rationality
in competition, sustainable voice growth (led by the rural market), large data opportunity,
and peak investments already behind. The best in the Africa business is yet to come.
Industry insights
Increasing rationality in competitive activity as underscored by recent pricing actions,
focus on paying customers as well as sales and distribution cost management.
Real wireless subscribers in India are estimated at ~600m, with actual rural
penetration at just 20-22%.
Non-voice revenue at 13.5% for the industry has significant room for improvement.
However, the industry will need to work hard to achieve the full potential of data
opportunity.
Africa market penetration in Bharti's footprint is relatively low at ~30%.
Telecom operators are keenly looking at the New Telecom Policy 2011 (NTP 2011).
Bharti expects the policy to (1) be comprehensive, (2) provide exit opportunities to
unviable operators, and (3) provide a level-playing field.
Company vision and strategy
Bharti is best positioned to capture rural and data opportunities.
The company has demonstrated its leadership in the market, with initiatives like
passive infrastructure sharing and recent tariff corrections.
Relentless focus on efficiency improvement, as underscored by the recent organization
restructuring.
Focus on continued execution in the Africa business. The business delivery model
has been aligned similar to India. Bharti would be looking to expand the Africa
footprint in the long-term.
Key triggers/milestones/challenges
NTP 2011 would be a key event to watch for.
Bharti aims to bring down its net debt/EBITDA ratio to 2x over the next one year
v/s 2.6x currently.
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
August 2011
11

7th Annual Global Investor Conference
HDFC
Mr Keki Mistry
Vice Chairman & CEO
HDFC
CEO Track
Mr Keki M Mistry
is Vice Chairman
and CEO of Housing Development
and Finance Corporation (HDFC).
Mr Mistry began his career with
Indian Hotels Company Limited, and
joined HDFC in 1981. He was
inducted on to the board of directors
of HDFC as Executive Director in
1993 and elevated to Managing
Director from November 2000. In
October 2007, Mr Mistry was
appointed Vice Chairman &
Managing Director of HDFC and
became Vice Chairman & CEO in
January 2010.
Mr Mistry obtained a bachelors
degree in Commerce from Bombay
University. A qualified Chartered
Accountant and 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 boards
of several Indian companies.
Key Takeaways
Core essence:The
housing finance business is likely to grow at a CAGR of 20-25%
over the next 10 years; RoE would improve by at least 100bp every year. Subsidiaries
will contribute significantly to growth now.
Industry insights
Inflation remains high. RBI is likely to increase rates by at least 25bp. Growth continues
to be strong in rural areas and metros (except Mumbai).
HDFC remains optimistic about demand for housing finance. India's mortgage to
GDP ratio is 9% as against 80%+ in other developed countries like UK and USA.
The key growth drivers are: (1) higher affordability due to increase in disposable
income - the average house value has declined from 22x annual income in 1995 to
4.8x in 2011, (2) rising urbanization - to increase from ~31% in 2011 to 40% by
2030, and (3) favorable demographics - average age of home buyers is 35 years,
and currently, ~60% of India's population is below the age of 30 years.
Government statistics place current housing shortage in India at 25m units (14m
units in rural and 10.6m in urban areas).
Company vision and strategy
HDFC maintains standard of income based lending, thereby cancelling out exposure
to volatility in real estate prices.
On AUM basis, company will 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%).
HDFC will continue to maintain flexibility on the borrowing side. In a rising interest
rate and tight liquidity scenario, retail deposits remain a key funding source. Flexibility
in funding sources helps HDFC to maintain spreads in a band of 2.15-2.35%.
HDFC plans to improve RoE by ~100bp every year.
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, though this is unlikely
in the near term.
Margins will sustain in the traditional range of 2.15-2.25%.
While standalone earnings will continue to grow at around 20%, consolidated
earnings growth will be even higher.
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
August 2011
12

7th Annual Global Investor Conference
ACC
Mr Kuldip K Kaura,
CEO & Managing Director
ACC
CEO Track
Mr Kuldip K Kaura
is CEO and
Managing Director of ACC.
He has rich experience and a deep
appreciation of the national and
international business environment.
He has had the benefit of
management education from reputed
institutions like London Business
School and Swedish Institute of
Management. He did his BE (Honors)
in Mechanical Engineering from Birla
Institute of Technology & Science,
Pilani in 1968.
Mr Kaura worked with Vedanta
Resources Plc for seven years,
initially as the Managing Director of
Hindustan Zinc and thereafter as
Chief Executive Officer of Vedanta
Resources until 2008 and played a
significant role in the transformation
and rapid growth of its group
companies. Prior to this, he had an
18-year stint with ABB India, an
engineering company. During this
period, he grew through various key
positions and was Managing Director
from 1998 to 2001.
He has served as Member of
National
Council
of
the
Confederation of Indian Industries
and is an office bearer of other such
professional bodies.
Key Takeaways
Core essence:
Long-term growth drivers intact to drive 9-10% volume CAGR, as ~70%
of cement demand is driven by individual demand for real estate development.
Industry insights
Long-term cement demand is likely to grow at a CAGR of 9-10% despite short-term
aberrations, as key demand drivers are intact. Infrastructure activity should pick up,
resulting in 15% CAGR in cement consumption by the infrastructure segment.
While current demand is ~230mt, current capacity is ~300mt. ACC is not overtly
concerned about excess capacities, as the industry would require ~25mt incremental
production to meet demand growth. Against demand CAGR of ~9%, it expects
capacity CAGR of ~7% over CY09-15.
No significant increase in RMC share (~7% penetration currently) is likely over the
next 5-10 years, but the share of bulk cement sales is likely to increase vis-à-vis
bagged cement sales.
ACC expects cost pressure to persist, impacted by decline in linkage coal and volatile
domestic coal prices. However, cement price increases should cover cost inflation,
as the industry would need to earn reasonable EBITDA/ton to support new capacities.
Company vision and strategy
Gathering limestone mines for future capacity addition:
ACC has been
acquiring limestone mines on continuous basis for greenfield capacity addition. It
has ~5mt of capacity addition at drawing board stage, which it is likely to finalize
over the next six months.
Securing energy security:
ACC has four coal blocks in JVs, with two blocks
where it has complete operational control. These two coal blocks have reserves of
~200mt. It expects supply from one of these coal blocks to start from 2HCY12.
While it may not result in savings, as it would be paying 'facilitation fee' of INR2,600/
ton (for B & C grade coal), it would ensure stable quality and quantity of coal supply.
Overall, it plans to have 20-25% of coal requirement from captive coal blocks.
Increased usage of alternate fuels:
ACC continues to focus on usage of alternate
fuels to dilute of impact of energy cost inflation. In CY10, it saved INR470m from
usage of alternate fuels. It expects savings to increase from USD1/ton of coal usage
to USD3/ton over the medium term.
Key triggers/milestones/challenges
Logistics:
Logistics issues could constrain demand growth, as moving material to
the market and meeting demand would be a challenge. ACC is relatively better
placed due to better rail-road mix of 55:45.
13
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
August 2011

7th Annual Global Investor Conference
Idea Cellular
Mr Himanshu Kapania
Managing Director
Idea Cellular
CEO Track
Mr Himanshu Kapania
is
Managing Director of Idea Cellular.
Before he took up this office on 1
April 2011, he was Deputy Managing
Director.
He joined Idea in September 2006,
with over 21 years' industry
experience. He has served the
company as Chief Operating Officer,
Corporate and Director of
Operations.
Mr Kapania has worked with Reliance
Infocomm as Chief Executive Officer
for Northern Operations, with
Network Limited as Deputy General
Manager - Marketing, with Shriram
Honda as Manager - Marketing, and
with DCM Toyota.
He is a BE (Electrical & Electronics)
from Birla Institute of Technology,
Ranchi and a postgraduate from the
Indian Institute of Management,
Bangalore.
Key Takeaways
Core essence:
Significant opportunity available in the Indian voice as well as data
markets over the medium term. Current focus only on tariff hikes, tower deals, etc
could be misplaced.
Industry insights
Penetration of voice services in India is still relatively low at ~50% v/s the 80-90%
benchmark.
Virtual consolidation in the industry is evident from increase in revenue market
share of top-three operators from ~55% to ~65% in the last 3-4 years despite
hyper-competition.
Wireless is a heterogeneous sector, with different operators having leadership in
different circles.
The share of non-voice services in revenue is set to increase, as most subscribers
will upgrade their handsets over the next few years and eco-system for 3G is being
developed.
While incremental operating cost for 3G is only a fraction of the current operating
costs, amortization and finance costs related to 3G spectrum will negatively impact
the bottomline of all operators.
Company vision and strategy
Idea has a strategy of over-investing in its established circles, which drives its
leadership in these operations.
Idea is focused on deepening its coverage and driving rural growth. 67% of net
subscriber additions for Idea come from rural markets.
Focus is on building scale, with 1.2b minutes/day. Idea is the eighth-largest operator
globally in terms of traffic.
Enhancing revenue market share, driven by (1) focus on quality of subscribers, (2)
cash profits to sustain investments, and (3) higher-than-industry traffic growth.
Idea is expanding its 3G reach and is rolling-out 3G services in 10 towns/day, as
significant growth is expected from wireless broadband on the handsets.
Key triggers/milestones/challenges
NTP 2011 would be a key event to watch for.
Continued overcapacity in the industry remains a challenge.
Potential exit of unviable operators could be an important milestone for the industry.
Increase in smart-phone penetration to drive data revenue.
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
August 2011
14

7th Annual Global Investor Conference
Zee Entertainment Enterprises
Mr Punit Goenka
Managing Director & CEO
Zee Entertainment
CEO Track
Mr Punit Goenka
is Managing
Director and CEO of Zee
Entertainment Enterprises. His
strong work ethics and hands-on
approach have been instrumental in
steering the Zee Empire to new
frontiers of success. Under his
leadership, Zee TV has emerged a
leader among General Entertainment
Channels in India.
Mr Goenka has grown up the ranks,
handling various responsibilities
across the Essel conglomerate for
over 14 years. He started his career
with Zee TV in 1995 as head of the
Music division and went on to
shoulder additional responsibilities
across Essel Group Companies. He
serves as a Director of other public
limited 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 is a great mentor. He has
shared his
knowledge
experiences and
at
management
Key Takeaways
Core essence:
Despite near-term sluggishness in the ad environment, medium to
long-term opportunity remains attractive, led by consumption growth and efforts to
improve subscription revenue.
Industry insights
Increasing regionalization and fragmentation of content remain dominant themes in
the Indian broadcasting space.
General entertainment and movies remain the dominant genres in India, accounting
for ~67% of total viewership.
Sports is a loss-making proposition due to lack of subscription revenue and majority
(~75%) of viewership and revenue coming from cricket.
Digitization would lead to (1) greater fragmentation, (2) better monetization of
niche genres and sports content, and (3) higher subscription revenue, reducing the
cyclicality associated with ad revenue.
Indian broadcasting industry revenue is likely to grow at ~16% CAGR over the next
four years.
Company vision and strategy
With its diversified network, Zee remains the leading broadcaster of Indian content
globally.
Media Pro, the recent distribution JV between Zee Turner and Star Den, is aimed at
getting the rightful share of pay revenue from LCOs.
The company will maintain its cost discipline and refrain from going after high-cost
GRPs, which do not generate adequate returns.
Key triggers/milestones/challenges
Lack of profitability in the sports genre and sluggish ad revenue environment remain
the key challenges.
Mandatory sunset for analog signals would be a significant milestone for the sector.
education programs such as Young
Managers Program at INSEAD,
France, and 'Birthing of Giants' by
Young Entrepreneurs' Organization
and MIT Enterprise Forum, Inc,
Boston, USA.
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
August 2011
15

7th Annual Global Investor Conference
Hindustan Unilever
Mr Nitin Paranjpe
CEO & Managing Director
Hindustan Unilever
CEO Track
Mr Nitin Paranjpe
was appointed
EVP South Asia and CEO Hindustan
Unilever, India in April 2008. He is
CEO & MD of Unilever's Indian
business.
He joined Hindustan Lever as a
management trainee in 1987 and
worked in several sales and
marketing roles. In 1996 he was
appointed Branch Manager for the
south region and in 1999 he became
a member of the Project Millennium
Team.
In 2000, Mr. Paranjpe moved to
London and was involved in a review
of the organisational structure. In
2001 he was Assistant to the Unilever
Chairman & Executive Committee in
London. On return to India in 2002,
he became Category Head-Fabric
Wash & Regional Brand Director
(Asia) for some laundry and
household cleaning brands. In 2004
he became Vice President - Home
Care (Laundry & Household Care)
India.
Mr. Paranjpe holds a BE Mechanical
degree from the College of
Engineering Pune, India and an MBA
in Marketing from Jamnalal Bajaj
Institute of Management Studies,
Mumbai.
Key Takeaways
Core essence:
HUL is investing in categories and channels of tomorrow, to gain from
changing consumption patterns and demographic dividend.
Industry insights
The Indian consumer has come of age. Media explosion, rising income levels and
increasing role of women in the decision making will increase demand for personal
care and processed foods.
Rural India offers huge opportunity and HUL has increased its distribution by 0.6m
outlets to cater to rising demand in rural India.
As far as urban demand is concerned, there is an upgradation wave in urban India
and new products are gaining acceptance at a fast rate.
Modern trade offers huge opportunity for players like HUL to launch new products
and garner higher share.
Company vision and strategy
Focus on new products for tomorrow, like fabric softeners, hair conditioners,
deodorants in personal care, and creamy spread, soy juice, Knorr Soupy and Kissan
Nutrismart.
Channels of tomorrow:
strength in modern trade, higher share and profitability.
Capabilities of tomorrow:
capture premiumization, portfolio approach with
products across the pyramid.
Sustainability:
looking to add 1b consumers globally, with environment friendly
approach.
Gain market share in existing categories and create new categories for the long
term.
Offer high quality products at right prices and strong execution in the field with
better service.
Key triggers/milestones/challenges
Product pricing:
competitive pricing with high quality
New launches:
to focus on personal care and food products
Competitive intensity:
to grow ahead of competition with competitive pricing
Increase in share of higher margin personal care in total sales.
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Harit Kapoor
+91 22 3029 5120
Harit.Kapoor@MotilalOswal.com
August 2011
16

7th Annual Global Investor Conference
The Black Economy
Jawaharlal Nehru University
Prof Arun Kumar
Chairperson
Center for Economic Studies, JNU
"Black Money: The Trail of India's
Hidden GDP"
Thematic
Presentation
Professor Arun Kumar
is the
Chairperson of the Center for
Economic Studies and Planning,
Jawaharlal Nehru University (JNU).
He has been teaching Economics at
the Center since 1984.
He went to Princeton University in
the US for a PhD in Physics but in
1977 switched to a PhD in Economics
at the Jawaharlal Nehru University.
He completed BSc (Physics) from St
Stephens College, India in 1970. He
is a gold medalist of the Delhi Higher
Secondary Board and Delhi
University. He has had visiting
assignments in Pavia University, Italy
and Humboldt and Leipzig
Universities, Germany.
His PhD thesis was on Inflation and
Terms of Trade, which gave a new
understanding of the role of trade
and government in inflation in India.
He specialized in Development
Economics, Public Finance and Public
Policy and Macroeconomics, and
published articles in these areas. His
book, The Black Economy in India,
published by Penguin, broke new
ground in thinking about the Indian
economy and its development. He
published a book, Challenges Facing
Indian Universities, and wrote
extensively on issues pertaining to
higher education in India.
Key Takeaways
Core essence:
The cost of India's black economy is 5% GDP growth sacrifice every
year since mid-70s. But for this, India's size of the economy would have been ~USD9
trillion.
Black economy: the conceptual issues
Black economy v/s black money:
Black economy is much wider than black income
and black money and corruption. Black money is only a tiny part of the black income
that is saved in cash. Black savings can also take the form of non-cash assets,
inventories, flight of capital, investments in legal and illegal activities, etc.
Corruption and black economy:
Black economy is much larger than corruption
(which is mainly bribes), and includes illegal activities like hawala (money laundering),
drug trafficking, smuggling, etc.
Two to tango:
The black economy involves both public and private sector.
Size does matter:
If the black economy is say 50% of the economy, can we just
add 50% to the white economy to get the size of the potential economy? The answer
is 'NO'. In many ways, the black economy has disproportionate impact on various
aspects of the economy.
The impact is severe
Loss in growth and potential:
The rates of growth are less than the potential
rate by 5% since mid-seventies. But for the black economy, Indian economy could
have been nine times its present size i.e. ~USD9 trillion. In other words, India could
have migrated from the poorest 30 countries of the world to middle income country
by now.
Policy failures:
Black economy leads to policy failures and reduces its effectiveness
leading to a sense of a failing state amongst citizens.
Macroeconomic implications:
Black economy raises black savings, but at the
same time it lowers investment rates, increases input output ratio and ICOR. It
lowers the employment potential, raises inflation, adversely affects the fiscal situation,
leads to flight of capital and balance of payments difficulties - thus, economic
development gets adversely affected.
Monetary sector:
Informal money market remains strong, thus a whole lot of
black liquidity remains outside the central banks calculus. This leads to volatility in
money multiplier and velocity of circulation defeating RBI's attempt to fight inflation
by raising rates.
Broader implications:
Black economy leads to governance deficit, criminalization
of society, wastage (activity without production), deterioration of norms (the usual
becomes unusual and unusual becomes usual), criminalization and weakening rule
of law.
17
Covering Analyst(s):
Dipankar Mitra
+91 22 3982 5405
Dipankar.Mitra@MotilalOswal.com
August 2011

7th Annual Global Investor Conference
The Black Economy (continued)
Inequality:
Black income is concentrated in 3% of households, but 97% of the people
are affected. The segment gaining from the black economy (i.e., the upper 3%) also
loses due to lost growth opportunities, uncivilized conditions, pollution, etc. However,
this 3% of the population is larger than many large size European countries, and their
spending of their black income feeds into the notion of India shining in terms of consumer
boom, etc.
Size is 50% of economy now
According to Prof Kumar's estimates, the size of the black money has grown from 5% in
1955 to 50% now.
The black economy encompasses all sectors of the economy but is concentrated most in
the tertiary sector. Therefore, the structure of the economy is different from what is
revealed by the white economy.
Number of scams and their size has increased exponentially since the 1950s, with nearly
one scam breaking out every week now.
The reason for black money - The Triad
Three pillars of the triad - Black economy is both systematic and systemic. The black
economy triad consists of the business, politician and the executive.
Ineffectiveness of redressal mechanism - Now the public delivery mechanism is largely
ineffective. In 1984 all commissioners of income tax said 95% of their department is
corrupt. Similarly in 2002, Municipal Commission of Delhi (MCD) said in Delhi High Court
that no honest engineer in Public Works Department (PWD).
Spirit unwilling - The triad leads to weakening of law, loopholes and resultant complexity.
As the spirit was unwilling, this has led to corruption cases knowingly being scuttled
(Hasan Ali, Liechtenstein disc, 2G, etc.). A large amount of cases are waiting to come
out of closet based on the private information with the Government but used selectively
for political end.
The solution
Committees and suggestions:
There have been many committees since independence
to look into the aspects of the black economy and made thousands of suggestions. But
the implementation has not been successful.
Narrow technical solutions don't work:
Also technical solutions like reducing tax
rates, reduced control, voluntary disclosure scheme, property acquisition, etc, have not
worked. This is because the nature of the problem is actually political and cannot be
tackled without strong will.
Strong RTI and accountability:
A strong RTI and accountability at all levels is a
minimum imperative.
Competition:
New parties and politics need to come up. Lack of democracy within
party also does not augur well.
An ideal Lokpal structure:
An ideal Lokpal structure would perhaps be to include the
top echelons of the executive and the judiciary. If accountability is ensured at the top,
then they would in turn demand accountability down-the-line. However, a very elaborate
Lokpal with large bureaucracy would be bound by the same weakness of corruption and
inefficiencies that the current system is susceptible to.
Public pressure critical:
The movement by Anna Hazare has rekindled hope that the
turning point may be coming. However, sustenance of the movement depends upon the
continuance of public pressure.
August 2011
18

7th Annual Global Investor Conference
India Insights
Mr Prakash Jha
Multiple Award-winning Film-maker
"India Insights: Through the lens
of a film-maker"
Thematic
Presentation
Mr Prakash Jha,
an award winning
filmmaker, runs a production
company, Prakash Jha Productions.
He has produced and directed 15
feature
films,
over
25
documentaries, two television
features and four television serials.
He has won eight national awards.
Mr Jha is most known for his political
and socio-political films such as Damul
(1984),
Mrityudand
(1997),
Gangaajal (2003), Apaharan (2005),
Rajneeti (2010) and the recently-
released Aarakshan. He has also
made Dil Kya Kare, Rahul and Hip
Hip Hurray.
Mr Jha joined Ramjas College, Delhi
University to do a BSc (Hons) in
Physics. He quit a year later and
decided to go to Mumbai and become
a painter, but while preparing to join
JJ School of Arts, he saw the
shooting of a film, Dharma, and got
hooked to filmmaking.
In 1973, he joined the Film and
Television Institute of India (FTII),
Pune to do a course in film editing
and he made his debut as feature
film director of Hip Hip Hurray in 1983,
scripted by Gulzar, and starring Raj
Kiran and Deepti Naval.
Key Takeaways
Core essence:
There are two Indias within India (i.e. the one that is more commonly
visible, and the other, which is behind the scenes, but has equal if not more powerful
influence on the Indian psyche).
Insights
Mr Prakash Jha mainly drew a parallel between his movies and the socio-politico-
cultural trends and aspirations in India.
Damul
(meaning 'bonded to death') - Released in 1984, this was Mr Jha's first
socio-political film (and his second after Hip Hip Hurray, 1983). The story is
about a bonded laborer who is forced to steal for his landlord, to whom he is
bonded until death. Set in rural Bihar of 1984, the film focuses on caste-based
politics and the oppression of the lower castes in the region through bonded
labor.
Mrityudand
(meaning 'death penalty') - Released in 1997, the movie captures
(1) the decline of the zamindar (landlord) the emergence of the thekedar
(contractor), and (2) religious fanaticism.
Gangaajal
(meaning water of river Ganga, a euphemism in the movie for acid
used to gouge criminals' eyes) - Released in 2003, the movie (1) highlights
rising criminalization in society, and (2) explores the relationship of society and
police.
Apaharan
(meaning 'kidnapping') - Released in 2005, the film reflects how
kidnapping almost gained the status of an industry in certain parts of India,
mainly the Hindi heartland. It also captured manipulation of democracy, and
how the rich and the powerful exploited the aspirations of the young to become
successful.
Rajneeti
(meaning 'politics') - Released in June 2010, Rajneeti is a larger-
than-life portrayal of political aspirations of India's youth.
Aarakshan
(meaning 'reservation') - This recently released film talks openly
about India's caste system where almost half the seats for higher education
and jobs are reserved for certain backward castes and classes. It also dwells
on the commercialization of education, which is of high concern today.
Mr Jha himself was born in a Brahmin family in Champaran, Bihar. His movies capture
themes which he has personally witness to since childhood.
He concluded by stating how growth in Bihar had been neglected due to historic
reasons, and how under the reign of Chief Minister Mr Nitish Kumar, the scene has
dramatically improved after a long time.
August 2011
19

7th Annual Global Investor Conference
India's Troubled Neighborhood
Gen VP Malik (PVSM, AVSM)
Chief of Army Staff (Retd)
Indian Army
"India's Troubled Neighborhood:
National Security Challenges"
Thematic
Presentation
General Ved Prakash Malik,
a
recipient of the Ati Vishisht Seva
Medal (AVSM) and the Param Vishisht
Seva Medal (PVSM) is an alumnus of
the National Defense Academy,
Khadakvasla and the Indian Military
Academy, Dehradun.
He assumed charge of the Indian
Army, becoming the nineteenth
Chief of Army Staff on 1 October
1997. He became Chairman, Chiefs
of Staff Committee of India from 1
January 1999. He coordinated and
oversaw the planning and execution
of Operation Vijay to successfully
defeat Pakistan's attempted intrusion
in Kargil over May-July 1999.
He was commissioned to the Third
Sikh Light Infantry on 7 June 1959.
He commanded the Infantry Brigade
in Jammu & Kashmir, where he was
awarded the Ati Vishisht Seva Medal
(AVSM). In December 1989, he was
appointed
General
Officer
Commanding, Mountain Division and
in August 1992, he assumed
command of the Corps in Punjab,
where he oversaw anti-militancy
operations in the state. In July 1995,
he was appointed General Officer
Commanding-in-Chief Southern
Command before moving to Army
Headquarters as Vice Chief of Army
Staff in August 1996. He was
decorated with the Param Vishisht
Seva Medal (PVSM) in 1996.
Key Takeaways
Core essence:
There are is a complementary and reflexive relationship between national
security and economic development.
What is national security?
Unlike the past, modern-day countries are unlikely to wage war with other countries for
territorial expansion, as they will not be accepted by the "conquered" people. In this
context, national security has three implications -
1. It does not only mean defending territorial integrity and preserving the nation's
sovereignty;
2. It also means development of trade and commerce with the rest of the world; and
3. It is necessary to be an important actor in international affairs.
National security can be mainly analyzed as (1) External and (2) Internal.
India's external security position
Geopolitically, India is bordered mainly by small nations ex China - Pakistan,
Afghanistan, Nepal, Bhutan, Bangladesh and Sri Lanka.
Security equation with Pakistan:
Pakistan has several major internal problems
on hand - economic, political, sectarian - and hence, in no position to wage any
major attack on India. So, the threat is mainly that of cross-border terrorism, which
may continue for some time. Still, the security equation is in India's favor and the
gap is only increasing.
Security equation with China:
Unlike Pakistan, the security equation with China
is increasing in the latter's favor. China has created more pressure points, both on
the ground and in international diplomacy. Also, it sells weapons to all neighboring
countries like Myanmar, Nepal, Sri Lanka, etc. However, one need not expect any
major war with China.
Other nations:
The other nations are too small to be of any security worry to
India. On the other hand, any security trouble in India will have repercussions for
these nations and the entire ASEAN region.
Internal security issues
In modern-day geopolitics, internal security assumes more importance than external.
The major issues here are -
1.
Perception more adverse than reality:
The popular perception is that internal
security in India is worsening e.g. rising spread Maoism in east and north-east
India. However, the reality is that casualties on account of internal hostilities are
actually coming down every successive year for the past several years.
August 2011
20

7th Annual Global Investor Conference
India's Troubled Neighborhood (contd)
2.
Police and Policy:
A strong police is a key factor in maintaining internal law and order.
However, increasingly, the local policemen are being used for VVIP security. Also, police
human resources are underdeveloped ("the man behind the gun is more important than
the gun"). There is also need for significant improvement in the intelligence system. On
policy, there is a high correlation between governance and security. Poor governance is
likely to trigger civil disobedience movements (e.g. the ongoing protest by Anna Hazare
and his supporters), which anti-social elements can take advantage of and create threats
to security and law & order.
Other issues
India's import dependence for weapons:
70% of India's weapons are imported.
This is not a healthy situation to be in, as in times of need, the required weapons may
not be available or may need to be procured at exorbitant cost. Hence, there is need to
create a level-playing field for the private sector in defense equipment business.
Silo-ism at the Center:
Various security-related arms of the government need to
work in closer co-ordination with each other.
The bottomline
Based on Genl Malik's experience at Kargil, he is convinced that the typical Indian soldier is
an extraordinary human being. And so long as he is there, Indians can rest assured that
there will be no major threat to national security.
August 2011
21

7th Annual Global Investor Conference
Macro-economic Challenges
Dr K C Chakrabarty
Deputy Governor
Reserve Bank of India
"Macro-economic Challenges:
The RBI Perspective"
Thematic
Presentation
Dr K C Chakrabarty
is the Deputy
Governor of Reserve Bank of India
(RBI). He is a seasoned banker, with
an accomplished banking career
spanning over three decades. Dr
Chakrabarty has earlier graced the
seat of Chairman & Managing
Director (CMD) for Punjab National
Bank and before that, for Indian
Bank. He has had a long and
distinguished career of 26 years at
the Bank of Baroda in various
capacities. He has also been the
Chairman of the Indian Banks'
Association (IBA) for a brief period.
Dr
Chakrabarty's
current
assignments include guiding and
overseeing the areas pertaining to
Rural and Urban Cooperative Banks,
Information Technology, Payment
and Settlement Systems, Customer
Services, Human Resource and
Personnel Management at the
Reserve Bank of India. He
represents India in the Committee
of Payment and Settlement Systems
(CPSS) constituted by Bank for
International Settlements (BIS) as a
Member. Dr Chakrabarty is also the
RBI Nominee on the Board of
Directors of NABARD and the
Chairman of the Institute for
Development and Research in
Banking Technology (IDRBT).
Key Takeaways
Core essence:
Interest rates will remain a function of inflation. Even if FY12 growth
slows down a bit, there would be no major adverse impact on corporate profitability
and investment climate.
On global risk
India cannot be decoupled from the world economy and global downturn would
affect us. However, nobody knows its full impact or shape of things to come as these
crisis happens once in many decades.
On inflation and growth
Inflation to come down:
Inflation would need to come down on its own as per
the trajectory given by RBI in this regard. Improved productivity and removal of
supply-side constraints are the only enduring solutions to control inflation.
Rising rates to protect savings:
RBI's anti-inflationary measures do not imply
that it takes growth for granted. However, as long as inflation remains high, RBI
would need to take appropriate measures. The real interest rates should be high
enough to attract the savers to park their funds into deposits rather than other
forms of saving. In an inflationary environment banks would start raising rates even
if RBI does not.
Growth outlook:
Growth should be 8% in FY12 and is achievable; but even if it is
a bit lower, there would be no adverse impact on corporate profitability and investment
climate.
On monetary transmission
International experience:
Worldwide, monetary transmission has been found to
have worked imperfectly, depending upon the environment.
Indian lag:
In India the response at the shorter end of the market has been found
to be immediate. It is also believed that the longer end responds with a lag of 3-6
months.
Asymmetric response from banks:
However, the response of the banks have
been found to be asymmetric in the two situations of rising and falling interest
rates. While banks have been prompt in their response in a rising interest rate
scenario, the lag is more in case of falling interest rate.
On exchange rate
No target:
RBI does not have any target for Rupee and intervenes only to curb
volatility in the exchange rate market.
August 2011
22

7th Annual Global Investor Conference
Macro-economic Challenges (contd)
No micro management:
Isolated events, e.g., oil price movement, payments to Iran,
etc. do not shape exchange rate policy.
On data issues
There are several data issues that affect policy making, mainly inflation data and trade
data.
CPI v/s WPI:
As far as issues between WPI and CPI is concerned, there are multiple
CPI indices that are available and over a longer period there is a convergence.
Trade data:
Similarly, data related to exports and imports need to be taken as an input
for policy even if it deviates from trend after six months.
On savings rate de-regulation
Desirable:
Deregulation is being discussed to protect the interest of depositors.
Not much impact:
Interest rates, and even more so average cost of deposits may not
go up very significantly as a result of deregulation.
On securitization and priority sector lending
KYC:
If the bank is buying a portfolio from an NBFC, they must demonstrate that KYC is
in place and that the portfolio is for priority sector lending.
Pricing:
Pricing of the securitized portfolio should largely be similar to the existing
portfolio of priority sector. Various other conditions should also be considered like true
sale, maturity of the asset, etc.
New guidelines:
RBI expects to release new guidelines on securitization and priority
sector shortly.
On asset quality
Not a concern:
Asset quality is not a great concern till GDP growth is 7.5%+.
Various measures to ensure financial stability:
RBI will ensure financial stability
and consider various regulations from time to time. 70% PCR requirement, increased
provisioning requirement in various buckets of NPAs are some of such examples.
Farm waiver and moral hazard:
Dr Chakrabarty specifically denied that farm waiver
scheme has led to moral hazard as (1) the design of the scheme was targeted, and (2)
the failure to repay had arisen out of extraordinary conditions.
Competition and bank licensing
Necessary …:
Competition in the banking sector would enhance customer service.
… but based on proper criteria:
However, fit and proper criteria are critical for
issuing new bank licenses.
August 2011
23

7th Annual Global Investor Conference
Company Connect
Sector/Company
Page
Sector/Company
Page
Automobiles
International Tractors/ Sonalika ..................... 25
Mahindra & Mahindra ..................................... 26
Maruti Suzuki India ........................................ 27
Popular Group ................................................ 28
Tata Motors ................................................... 29
Banking, Finance & Insurance
Axis Bank ...................................................... 30
Bank of India ................................................. 31
Canara Bank .................................................. 32
Central Bank of India ..................................... 33
Dewan Housing Finance Corp ........................ 34
Federal Bank ................................................. 35
HDFC ............................................................. 36
HDFC Bank .................................................... 37
ICICI Bank ..................................................... 38
IDBI Bank ...................................................... 39
IDFC .............................................................. 40
IndusInd Bank ............................................... 41
ING Vysya Bank ............................................. 42
Kotak Mahindra Bank ..................................... 43
Manappuram Finance ..................................... 44
Muthoot Finance ........................................... 45
Rural Electrification Corp ............................... 46
Shriram Transport Finance Co ........................ 47
State Bank of India ........................................ 48
UCO Bank ...................................................... 49
Yes Bank ........................................................ 50
Cement
Grasim/UltraTech ........................................... 51
Engineering
AIA Engineering ............................................ 52
BGR Energy Systems ..................................... 53
Havells India .................................................. 54
Larsen & Toubro ............................................ 55
Suzlon Energy ................................................ 56
VA Tech Wabag ............................................. 57
Voltas ............................................................ 58
FMCG
Bajaj Corp ..................................................... 59
Dabur India ................................................... 60
Emami ............................................................ 61
Hindustan Unilever ........................................ 62
ITC ................................................................ 63
Marico ........................................................... 64
Pidilite Industries ........................................... 65
Radico Khaitan ............................................... 66
Information Technology
Financial Technologies India ........................... 67
Info Edge India ............................................. 68
Infosys .......................................................... 69
TCS ............................................................... 70
Wipro ............................................................ 71
Infrastructure
Ashoka Buildcon ............................................ 72
Dedicated Freight Corridor Corpn (DFCC) ...... 73
NCC ............................................................... 74
Simplex Infrastructures ................................. 75
Media
Dish TV India ................................................. 76
HT Media ....................................................... 77
Zee Entertainment Enterprises ....................... 78
Metals
Hindalco Industries ........................................ 79
Hindustan Zinc ............................................... 80
Jindal Steel & Power ...................................... 81
JSW Steel ...................................................... 82
Tata Steel ...................................................... 83
Oil & Gas
BPCL .............................................................. 84
HPCL ............................................................. 85
Oil India ......................................................... 86
ONGC ............................................................ 87
Reliance Industries ........................................ 88
Pharmaceuticals
Biocon ........................................................... 89
GlaxoSmithKline Pharma ................................. 90
Glenmark Pharma ........................................... 91
Lupin ............................................................. 92
Opto Circuits India ......................................... 93
Sun Pharma ................................................... 94
Real Estate
DLF ............................................................... 95
Jones Lang LaSalle ........................................ 96
Retail
Pantaloon Retail India .................................... 97
Shoppers Stop ............................................... 98
Titan Industries ............................................. 99
Telecom
Bharti Airtel ................................................. 100
IDEA ............................................................ 101
Reliance Communications ............................. 102
Utilities
Aryan Coal .................................................. 103
CESC ........................................................... 104
NTPC ........................................................... 105
Reliance Infrastructure ................................ 106
Others
Jain Irrigation Systems ................................ 107
Raymond ..................................................... 108
August 2011
24

Sector:
Automobiles
7th Annual Global Investor Conference
International Tractors
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Key Takeaways
Fourth-largest tractor manufacturer in India
International Tractors is the fourth largest tractor manufacturer in India. It provides a
complete product line, including tractors, multi-utility vehicles, engines, farm machinery
attachments, diesel gensets, auto components, and pick & carry cranes. It has tractor
manufacturing facilities in Punjab, with total capacity of 70,000 units. Majority of its
tractor exports are to North African and SAARC countries.
Expects 18-20% CAGR (FY11-15) for the industry
Mansi Varma
+91 22 3982 5418
Mansi.Varma@MotilalOswal.com
The management expects the size of the Indian tractor industry to reach 0.54m
units by FY12 (~13% growth) and ~1m units by FY15 (CAGR of 18-20%), driven by:
Global food shortage driving up crop yields and prices
Low tractor penetration levels (especially in the southern region)
Government support by higher allocation of expenditure to agriculture
Higher non-farm income (NREGA, etc)
Rising labor cost and lower availability of labor
Increasing access to finance through banks and NBFCs
Emergence of corporate farming
Regionally broad-based growth, with West and East growing rapidly (over 50%), as
against higher dependence on the northern states, earlier.
40-50HP segment is gaining traction, driven by additional non-farm applications.
Capacity expansion endorses robust growth estimates
The company will be investing INR2.5b over 2-3 years for capacity expansion from
45,000 units in FY11 to 120,000 units in FY14.
It is looking at ~28% volume CAGR (FY11-15) to ~120,000 units and aspires to gain
15% market share in the domestic markets (from 8% currently).
While it is very strong in higher HP tractors, International Tractors plans to launch
an 18HP tractor focused on export markets as well as the domestic market.
The management anticipates strong growth in the exports market and expects exports
to grow at 38% CAGR over FY11-15 to 25,000 units.
The company has strong presence in the North and West (Punjab, Haryana, Western
UP, Gujarat, Chhattisgarh). It is now expanding in the East and the South. It is
doubling its presence in the southern region by adding dealers. It plans to add ~105
dealers across the country, taking total dealers to 817.
EBITDA margin to improve from FY11 levels
It enjoys above industry average EBITDA margin at ~20%, despite offering better
dealer margins. Higher margins are a result of (a) better product mix, with larger
contribution from higher HP tractors, (b) higher operating leverage, (c) focus on
cost reduction and value engineering initiatives, (d) higher volumes from tax-free
zone, and (e) retention of partial benefit due to lowering of excise duty on components.
August 2011
25

Sector:
Automobiles
7th Annual Global Investor Conference
Mahindra & Mahindra
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
MM IN
614
714
9.6
825/584
12/22/27
YEAR
END
N. SALES
(INR M)
S/A PAT S/A EPS CONS. CON EPS
(INR M)
(INR) EPS (INR) GR (%)
P/E
(X)
CONS,
P/E (X)
ROE
(%)
ROCE
(%)
EV/
SALES
EV/
EBITDA
3/10A 185,888 20,451
3/11A 234,944 25,732
3/12E
3/13E
282,395 26,942
320,078 31,023
34.3
43.1
45.1
52.0
40.8
48.2
48.4
63.9
61.9
18.1
0.6
31.9
20.8
16.6
15.8
13.7
17.5
14.8
14.7
11.2
26.1
25.0
22.0
21.3
25.4
25.6
23.2
23.3
2.2
1.8
1.5
13.7
12.1
11.1
1.3
9.6
Consolidated
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Key Takeaways
Sufficient capacity for next three years
The management maintained its volume growth guidance at 10% for the automotive
industry and at 11-13% for the tractor industry. It believes it has sufficient capacity
for the next three years to support 10-11% volume CAGR.
Mansi Varma
+91 22 3982 5418
Mansi.Varma@MotilalOswal.com
For tractors, it is operating at 80-85% utilization on two shifts, which can be increased
to three shifts. It has increased capacity of
Yuvraj
to 20,000 units from 10,000
earlier. It is setting up a plant at
Zaheerabad,
with a total capacity of 120,000 units.
In the auto segment, its recently commissioned Chakan plant, with a capacity of
300,000 units and expandable to 500,000 units, would be the key growth driver.
Yuvraj,
launched only in Gujarat, Maharashtra, Madhya Pradesh and Karnataka,
would be a volume driver for the tractor business. Being an outsourced product, it
would have lower margins, but would enjoy higher RoE and RoCE.
Ssangyong: Volumes of 0.12m, EBITDA positive in CY11
It maintained its guidance of ~50% volume growth to 120,000 units in CY11, driven
by recovery in its markets, and the recent launch of
Korando-C
and
Rexton.
It indicated
that lack of investment in new products had impacted Ssangyong's (SYMC)
performance earlier. It expects revenue growth of 50% to USD3b for SYMC in CY11.
SYMC has a capacity of 120,000 units (on single shift basis), which it expects to fully
utilize in CY11. Ramp-up of operations in CY12 would drive operating leverage.
Its 2QCY11 performance was impacted by employee bonus and branding spends on
Korando-C
launch. It expects SYMC to be EBITDA positive in CY11, despite reporting
a loss in 1HCY11. However, it would not break even at PAT level in CY11.
It intends to invest USD240m in CY11 - USD200m on product development and
USD40m on branding. It will be funded through fresh borrowings by SYMC.
M&M has not made any significant changes in SYMC's management, with only CFO
and some representatives in key functions from M&M.
Other takeaways
M&M expects the issue of VAT-related change in Maharashtra to be resolved by
September 2011.
It maintained its capex guidance of INR50b and investment guidance of INR20b-25b
over the next three years.
Valuation and view
Short-term headwinds notwithstanding, we remain positive on M&M's prospects, driven
by its dominance in its core business of UVs and tractors, favorable competitive dynamics,
and strong volume growth momentum. The stock trades at 15.9x FY12E and 13.8x
FY13E consolidated EPS.
Buy.
August 2011
26

Sector:
Automobiles
7th Annual Global Investor Conference
Popular Group
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Key Takeaways
One of the largest automobile dealership chains in India
The Popular Group has been in the automobile industry for the last seven decades. It is
one of the largest automobile dealership chains in India, with dealerships of Maruti
Suzuki (second-largest dealer in India), Honda (cars), Tata Motors (CVs) and Jaguar. It
has a combined turnover of over INR20b, a workforce of over 6,500, and a network of
over 200 units in Kerala, Chennai and Bangalore.
Demand muted, but 6% growth likely in FY12; 15-20% CAGR over 4-5 years
It expects its Maruti dealership to grow by 6% in FY12, despite a flat FY12 YTD,
driven by new
Swift
and pick-up in festive season. While current walk-ins and
conversions have declined, it expects demand pick-up during the festive season (17
Aug to 17 Sep). Its inventory has increased to ~35 days (from 20-22 days).
It believes that a pause in further rate hikes by RBI would trigger demand recovery.
While discount levels are lower in South India, Popular is of the view that current
higher discounts are for pushing non-fast selling models through discounts.
It is currently witnessing replacement demand of 35-40% (with ~25% replacement
through exchange program), as against 90-95% replacement demand in developed
countries. Its experience suggests a replacement cycle of 4-5 years.
Spares & Service - key profit driver for the dealer & big opportunity for OEs
Spares & Service is a key driver for any dealer, as margins on new car sales are
very low (<5%), whereas profitability on spare sales and service is high (15-20%).
For every new car sold, a dealer services 8-10 cars a year (12-13 for Popular), with
normal servicing cycle of once in six months. Non-dealer authorized service centers
service a similar number, taking total cars serviced through OEM-authorized centers
to 16-20 cars for every new car sold.
Increasing sophistication and implementation of BS-IV and BS-V would drive out
local garages for servicing. Further, higher car penetration would drive demand for
genuine spares. Maruti's genuine spares are competitively-priced and the OEM is
focused on reducing usage of spurious spares. Even for OEMs, spare sales (18-20%
margins) offer a big opportunity, as all spare supplies to authorized service centers
(including dealer) are by the OEM.
Other takeaways
The Popular Group, which is also a dealer for Honda cars, has not yet witnessed any
impact of the aggressively-priced
Honda Jazz
on
Swift
sales.
Being a dealer for both Maruti and Honda, it can differentiate between business
practices of OEMs - dealer friendliness, feedback systems, accessibility to senior
executives, etc. It believes Maruti is way ahead of its competitors.
Popular believes that Maruti is improving its quality and value for money (e.g. new
Swift),
whereas its competitors are going the other way (except Hyundai).
August 2011
27

Sector:
Automobiles
7th Annual Global Investor Conference
Maruti Suzuki India
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
MSIL IN
289
1,169
7.4
1,600/1,087
13/9/5
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
CONS.EPS
(INR)
EPS
GR. (%)
CONS.P/E
(X)
P/CE
(X)
P/BV
(X)
EV/
EBITDA
ROE
(%)
ROCE
(%)
3/10A 296,231
3/11A 369,199
3/12E
3/13E
404,682
474,952
25,068
23,101
23,827
28,089
90.8
82.4
85.5
101.5
113.8
-9.2
3.7
18.7
12.8
14.1
13.6
11.5
10.1
10.1
9.4
7.8
2.8
2.4
2.1
1.8
6.9
7.3
7.1
5.5
21.1
16.5
14.9
15.3
28.4
22.1
19.8
20.4
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Key Takeaways
Festive season critical for 2HFY12 recovery and 5-10% growth guidance
Maruti Suzuki (MSIL) has guided 5-10% volume growth for FY12, as against ~7%
de-growth in FY12 YTD (~32,000 units lost due to strike and discontinuation of old
Mansi Varma
+91 22 3982 5418
Mansi.Varma@MotilalOswal.com
Swift).
It expects growth to be critically dependent on festive season demand. While
inquiries have grown by 30%, conversion rate remains poor due to higher cost of
ownership and increase in time taken for loan approval.
While demand growth in the top 10 cities and rural markets remains intact, demand
in middle India (between top-10 cities and rural markets) is severely impacted.
Premium compact cars growth remains intact due to availability of diesel versions.
The new
Swift,
launched on 17 August, has received 70,000 bookings and is likely
to register monthly volumes of 16,000-17,000 against ~12,000 for its older version.
Currently, the new
Swift
has a waiting period of three months.
MSIL expects realizations to increase on account of improvement in product mix,
but this could be diluted by higher discounts in 2QFY12.
Margins under pressure in 2QFY12, but to improve in 2HFY12 and FY13
MSIL expects 2QFY12 EBITDA margin to come under pressure, impacted by adverse
exchange rate for JPY on vendor imports and direct imports (hedged at a slightly
unfavorable rate than 1QFY12) and higher discounts.
However, it expects margins to improve in 2HFY12 due to (a) pick-up in demand, (b)
savings in RM cost, and (c) lower discounts.
For FY13, MSIL is targeting 100-150bp savings in cost, driven by its localization
program, which was implemented last year. It is targeting to reduce its vendor
imports from 14% of sales to 6-7% in three years beginning FY12.
Other takeaways
It expects diesel engine capacity addition (by 50,000 units to 290,000 units) and
phase-I of Manesar (of 250,000 units) to be operational by September 2011 and
phase-II at Manesar (of another 250,000 units) by September 2012.
The management is not overtly worried about the aggressively priced
Honda Jazz,
as it believes that such aggressive price reduction does not go well with existing car
owners and financiers (as residual value declines). Also, aggressive price cuts on
existing models do not help due to lack of 'novelty' factor (e.g.
Skoda Fabia).
It plans to expand its dealer network to 1,500 from 933 outlets (as of March 2011).
Valuation and view
We see limited downside to MSIL's margins from the current levels, unless there is
significant adverse forex movement. The stock trades at 13.6x FY12E and 11.5x FY13E
consolidated EPS, and 9.4x FY12E and 7.8x FY13E CEPS.
Buy.
August 2011
28

Sector:
Automobiles
7th Annual Global Investor Conference
Tata Motors
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
TTMT IN
538
737
8.7
1,381/700
-13/-25/-16
YEAR
END *
SALES
(INR M)
ADJ PAT ADJ EPS
(INR M)
(INR)
NORMAL.
CONS. NORMAL.
P/E (X)
P/E (X)
ROE
(%)
ROCE
(%)
EV/
EV/
EPS (INR) ^
SALES EBITDA
3/10A 925,193
3/11E 1,231,333
3/12E 1,433,353
3/13E 1,611,138
15,051
90,695
84,056
94,845
22.6
136.5
126.5
142.7
-21.4
72.9
74.0
86.5
32.5
5.4
5.8
5.2
-34.5
10.1
10.0
8.5
18.3
47.3
32.2
28.0
10.7
24.6
22.1
21.7
0.7
0.5
0.4
0.3
7.6
3.7
3.0
2.4
* Consolidated; ^ Normalized for capitalized expenses
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Key Takeaways
New Land Rover Evoque to drive JLR volumes in FY12
It expects volumes to grow significantly from FY11 levels of 243,000, driven by the
launch
Evoque
and
MY12XF,
and doubling of volumes in China.
Mansi Varma
+91 22 3982 5418
Mansi.Varma@MotilalOswal.com
It has received favorable response for
Evoque
(to be launched in September 2011)
with over 1,50,000 enquiries and 20,000 pre-orders. It expects
Evoque
volumes of
70,000-80,000 in the first full year of launch.
Jaguar volumes are likely to pick up, led by the launch of refreshed
XJ
for China, the
impending launch of
MY12XF
(US in September 2011).
This coupled with easing of capacity constraint should help product mix to normalize
in favor of Jaguar (to 30:70 - J:LR v/s 10:90 in 2HFY11).
EBIT margin at JLR to remain under pressure at 1QFY12 levels
The management expects EBIT margin at JLR to remain under pressure at 1QFY12
levels, impacted by (a) commodity cost stabilizing at higher levels, (b) adverse
forex movement, (c) higher promotional cost on account of
Evoque
and
MY12
launches, and (d) higher depreciation and amortization due to
Evoque
launch.
Internal cost efficiency and better market mix would partly dilute cost push.
Maintains CV volume growth of 14-15% in FY12; margins to improve
The management expects the domestic CV business to grow 14-15% in FY12, with
7-10% growth in M&HCVs and 18-20% growth in LCVs. While FY12 YTD growth is
~14%, it expects 2HFY12 growth to be higher due to seasonality and heavy 1HFY11
due to BS-III implementation in 2HFY11. It is not witnessing any meaningful impact
of increase in interest rates, as availability of finance continues to be good.
For PVs, it expects FY12 volumes to be flat, despite ~25% decline in FY12YTD,
driven by pick-up in
Nano
and UV volumes (Aria variants, new
Safari
and
Venture).
It expects standalone margins to improve from 8.4% in 1QFY12, driven by (a)
reduction in steel cost by INR1/kg from September 2011 and in other commodity
cost, and (b) expected pick-up in loss-making PV business.
Other takeaways
JLR inventory is under control (including dealer-level inventory) at ~70 days (v/s
135 days during the credit crisis and 80-90 days in FY11).
For JLR, it has a strategy to launch at least two products per platform.
Evoque
is
based on the
Freelander
platform.
The management maintains capex plan of ~GBP1.5b per year for JLR for the next
few years. However, if volumes come under pressure, it would reduce capex to
~GBP800m for investment in critical projects.
The company's 1QFY12 EBITDA margin was impacted by ~100bp due to VAT-related
changes in Maharashtra. It expects some resolution of the issue based on the
dialogues of the industry with the state government.
August 2011
29

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
Axis Bank
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
AXSB IN
412
1,051
9.5
1,608/1,023
-6/-6/-12
YEAR
END
NET INCOME
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
BV
(INR)
P/BV
(X)
P/ABV
(X)
ROAA
(%)
ROAE
(%)
3/10A
3/11A
3/12E
3/13E
89,503
111,951
130,342
160,460
25,145
33,885
40,679
47,234
62.1
82.5
99.1
115.1
22.7
33.0
20.0
16.1
-
12.7
10.6
9.1
396
463
544
638
-
2.3
1.9
1.6
-
2.3
2.0
1.7
1.5
1.6
1.5
1.5
19.2
19.3
19.7
19.5
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Loan growth guidance of 1.3-1.4x industry average
The management expressed concerns over a slowdown in investments and hence
sanctioning of new projects. However, expects strong demand for working capital
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
requirement and past sanctions will lead to systemic credit growth of 18% in FY12.
Based on the current pipeline the management is confident of growing its loan book
at 1.3-1.4x industry average.
Margins at normalized level, management expects no more moderation
In past 2 quarters margins declined 60bp to 3.3% (due to higher share of PSL in
incremental loans and rising cost of funds), and has come to a normalized level (in
line with management guidance of 3.25%-3.5%).
While seasonally, margins for AXSB come under pressure in the first and fourth
quarters due to a strategy of building the priority sector book, the second and third
quarters are generally strong as low-yielding loans run off.
With CASA ratio of ~40% and improving loan yields, management guided for
stable/improved margins henceforth and targets margins of 3.25-3.5% in FY12.
Power sector exposure optically higher
AXSB's overall exposure to the power sector was 9.8% (of corporate exposure) of
which fund-based was ~5.5%. The balance sheet exposure was ~3.5% of overall
loans and a large part of the non-fund based exposure was keeping in mind syndication
opportunities, LC and BG-related fee income.
In most of the projects AXSB is a consortium banker with NBFCs like PFC, REC and
IDFC who cannot issue LC and BG. Thus a large part of the exposure comes in its
non-fund based exposure. Once it becomes fund-based it syndicates the loan.
Typically, of this converted non-funded to funded exposure, 15% remains on the
book and it syndicates the rest.
Other highlights
Fee income growth to largely track balance sheet growth.
Bank targets to maintain CASA ratio of 38-40%.
Slippages trend has been encouraging with slippage ratio declining from 1.4% in
FY11 (2.2% in FY10) to 0.8% in 1QFY12, and management expects trend to continue.
Valuation and view
Loan growth of 1.3-1.4x of industry, NIM of 3.25-3.5%, fee income growth in line
with asset growth, stable cost to income ratio and falling credit costs will ensure
RoA of 1.5%+ and RoE of 19%+ over FY12-13. The stock trades at 1.9x FY12E BV,
1.6x FY13E BV and 10.6x FY12E EPS, 9.1x FY13E EPS.
Buy.
August 2011
30

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
Bank of India
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
BOI IN
546
306
3.7
588/301
-14/-19/-22
YEAR
END
NET INCOME
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
BV
(INR)
P/BV
(X)
P/ABV
(X)
ROAA
(%)
ROAE
(%)
3/10A
83,725
17,410
24,887
28,413
35,617
33.1
45.5
51.9
65.1
-42.1
37.4
14.2
25.4
-
6.7
5.9
4.7
243
292
333
384
-
1.0
0.9
0.8
-
1.1
1.0
0.9
0.7
0.8
0.7
0.8
14.2
17.3
16.6
18.2
3/11A 104,525
3/12E
3/13E
110,900
130,746
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Asset quality issues to persist
Bank of India's (BOI) asset quality deteriorated sharply in 1QFY12 with annualized
slippages of 3.2% compared with 1.7% in FY11. Of the gross slippages worth
INR16.8b in 1QFY12, slippages worth INR8b were due to system-based recognition
of NPAs (now loans above INR0.5m are covered under system based recognition of
NPA).
The management expects slippages of ~INR15b-16b in 2QFY12 as the bank takes
smaller accounts under the fold of the system-based NPA recognition method, post
which, slippages are likely to normalize.
Recoveries and upgrades are likely to gain pace in 2HFY12, resulting in lower net
additions to NPAs.
O/s restructured accounts at the end of 1QFY12 were INR111b (5.2% of the loan
book). Of the restructured loans, accounts totaling INR23.4b slipped into NPAs (21%
of the restructured book, the highest in the industry).
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
Margins likely to improve sequentially in 2QFY12
In 1QFY12 global margins contracted sharply by 75bp QoQ to 2.14% due to a steep
decline in domestic margins.
In 2QFY12, the management expects margins to improve to ~2.5% due to shedding
of high-cost bulk deposits. Resultantly, CD ratio is likely to improve, translating into
sequential margin improvement.
The management expects margins to improve to 2.75% by end of 4QFY12. However,
on a full year basis, margins are likely to be lower.
Other highlights
FY12 loan growth is expected to be ~18%, in line with the industry credit growth.
While CASA ratio declined from 35% in FY08 to ~29% in 1QFY12, the management
expects to sustain/improve CASA ratio from here as it is moderating its balance
sheet growth with increased focus on CASA deposits.
Valuations and view
We expect RoA of ~0.8% over FY12-13, RoE of 16-18% over FY12-13 and earnings
CAGR of ~20%. We expect BOI to report EPS of INR52 in FY12 and INR65 in FY13.
BV is expected to be INR333 in FY12 and INR384 in FY13. The stock trades at 0.9x
FY12E BV and 0.8x FY13E BV. Maintain
Neutral.
August 2011
31

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
Canara Bank
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
CBK IN
443
420
4.1
844/405
-7/-18/-9
YEAR
END
NET INCOME
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
BV
(INR)
P/BV
(X)
P/ABV
(X)
ROAA
(%)
ROAE
(%)
3/10A
3/11A
3/12E
3/13E
85,384
105,263
109,991
128,070
30,214
40,259
37,529
44,395
73.7
90.9
84.7
100.2
45.8
23.3
-6.8
18.3
-
4.6
5.0
4.2
306
405
477
563
-
1.0
0.9
0.7
-
1.1
1.0
0.8
1.2
1.3
1.0
1.0
26.8
26.4
19.2
19.3
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
CBK asset quality to improve in 2HFY12
Canara Bank's (CBK) 1QFY12 slippages were high at INR13.7b as banks shifted their
portfolio between INR0.5m and INR0.2m to CBS for NPA recognition.
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
The remaining portfolio constitutes ~7% of the book and management expects
slippages of ~INR6b due to transition of its remaining portfolio through system-
based recognition of NPA in 2QFY12.
In 2HFY12, the management expects asset quality to improve significantly, but has
conservatively guided for gross slippages of ~INR40b in FY12 (v/s INR35b in FY11).
The management expects strong recoveries and upgrade, which will provide cushion
to asset quality and can lead to a positive surprise.
Margins bottom out
CBK margins declined ~45bp QoQ to 2.4% in 1QFY12 led by higher slippages and
lag impact of deposit re-pricing.
While slippages are expected to be high in 2QFY12 as well, lower interest income
reversal (management guidance of ~INR1b v/s INR2.1b a quarter ago) and increase
in yield on loans will provide cushion to margins. The management guided for margins
of 2.5-2.6% in 2QFY12 and 2.7-2.8% in FY12.
No sign of stress in power sector exposure
CBK exposure to power and infrastructure is ~INR450b (INR290b towards power
segment), of which INR100b is towards short term loans.
Exposure towards generation companies stands at INR75-80b of which INR35b is
towards private sector and rest towards SEB.
Loans to SEB are largely backed by govt. guarantee while loans to private segment
are disbursed only where the project is on stream. It has been receiving payments
on time and does not foresee any issue in asset quality.
Other details
The CBK management guidance is for loan and deposit growth of ~20%.
The management is focusing on shedding bulk deposits and planning to increase
retail deposits. Bulk deposits form ~35% of overall deposits
Fee income growth is expected to be ~15%.
Valuation and view
Volatile asset quality performance, weak liability side with CASA ratio of ~25%, and
higher proportion of bulk deposits are a concern. Due to high growth and leverage,
RoE will be strong at ~19% in FY12 and FY13. It trades at 4.2x FY13E EPS and 0.7x
FY13E BV. We believe current valuations largely factor in the negatives.
Buy.
August 2011
32

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
Central Bank of India
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
CBOI IN
647
101
1.4
212/96
-8/-13/-25
YEAR
END
NET INCOME
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
BV
(INR)
P/BV
(X)
P/ABV
(X)
ROE
(%)
ROA
(%)
3/08A
3/09A
3/10A
3/11A
30,161
32,984
42,805
65,904
5,522
5,712
10,582
12,524
11.6
12.2
24.6
27.7
-24.3
4.5
102.6
12.4
-
-
-
3.6
76.8
86.3
108.0
131.2
-
-
-
0.8
1.7
1.5
1.0
0.9
16.8
14.9
25.4
23.2
0.5
0.4
0.6
0.6
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Asset quality to remain under pressure
In 1QFY12 Central Bank of India's (CBOI) slippage was ~INR6b (annualized slippage
ratio of 1.8% compared with 1.3% in FY11), of which the management stated about
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
INR3b was technical in nature.
CBOI has not yet moved to system-based recognition of NPA and expects to transit
its portfolio through system-based recognition of NPA over the next two quarters
(has received government approval), which will keep slippages at an elevated level.
Credit monitoring is a key focus area for CBOI and management guidance is to
contain FY12 GNPA and NNPA below 2.25% and 1% respectively.
CBOI FY12 margin to be 3%+
In 1QFY12 reported margins declined ~50bp to 3%, but adjusted for interest on IT
refund in 4QFY11 the decline would have been ~15bp.
While the cost of deposits is increasing, ~73% of assets are on a floating rate basis,
which enables the bank to swiftly pass on the impact of rising cost of funds and
maintain margins at ~3%.
CASA growth was healthy(15% YoY in 1QFY12) led by strong traction in saving
deposits (17% YoY in 1QFY12), which will help CBOI to contain the cost of funds.
The management expects traction in savings deposits to continue and guidance is
for SA deposits growth of 20%+ in FY12.
Focus on profitability, efficiency rather than growth
CBOI has a strong franchise network of 3,800+ branches, which is underleveraged
with asset/branch of INR574m (v/s an average of ~INR910m) and business/branch
of INR850m (v/s an average of INR1.3b) leaving ample scope for improvement.
The management has now assigned the responsibility of business to zonal offices
rather than mere administrative functions. This will strengthen the sanctioning
process and reduce turnaround time, leading to better productivity.
Valuation and view
With the new management's focus on profitable growth CBOI's core performance is
expected to improve in the coming quarters, but asset quality pressure will act as
on overhang on the stock. It trades at 3.6x FY11 EPS of INR28 and 0.8x FY11 BV.
Not Rated.
August 2011
33

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
Dewan Housing Finance Corp
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
DEWH IN
105
215
0.5
347/190
11/-3/-11
YEAR
END
NET INCOME
(INR M)
Adj PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
BV
(INR)
P/BV
(X)
ROAA
(%)
ROAE
(%)
3/10A
3/11A
3/12E
3/13E
3,227
4,867
6,120
7,635
1,507
2,297
2,814
3,490
18.4
22.0
26.9
33.4
28.8
19.7
22.5
24.0
-
9.8
8.0
6.4
103
148
171
200
-
1.4
1.3
1.1
1.9
1.8
1.5
1.4
22.7
19.2
16.9
18.0
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Loan growth to remain healthy
Dewan Housing Finance's (DEWH) management aims to grow its consolidated loan
book by 30-35% in FY12 subject to continued rate hikes by the central bank in its
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
attempt to rein in inflation, which could adversely affect its growth trajectory.
Real estate prices in the metros continue to hold but in tier-II and tier-III cities,
which are DHFLs core markets, prices have seen some softening.
The incremental average ticket size increased to INR1m against the overall average
ticket size for the portfolio of INR0.5m-0.6m.
Margins unlikely to contract significantly
On a standalone basis DEWH's margins have remained in a band of 2.9-3.1%. The
management expects margins to be ~2.8-2.9%.
DEWH recently raised its lending rates by 125bp, effecting a 75bp and a 50bp hike
in the month of July and August respectively.
The NIMs for Deutsche Postbank Home Finance Limited (DPHFL) were ~2.7% for
1QFY12, which the management expects to bring to DEWH's level by increasing the
proportion of high yielding project finance and developer finance portfolio in the
DPHFL book. Currently, 99% of the DPHFL portfolio comprises residential mortgages.
DEWH's incremental cost of borrowing is 10.25-10.5% and the blended portfolio
yield is 13-14%.
Asset quality likely to remain healthy
The management does not foresee significant strain on asset quality. As on 1QFY12
gross NPAs were less than 1% and provision cover was healthy at 70%.
Capital raising in the offing
After the recent acquisition of Deutsche Postbank Home Finance Ltd. (DPHFL), the
leverage for DEWH on a standalone basis is ~9x and on a consolidated basis, it is
~13x.
DEWH may consider raising capital in the near to medium term as it consolidates
DPHFL with itself.
Current CAR for the standalone entity is 19% with tier-I ratio of 13.8%. DEWH has
headroom to raise tier-II capital.
Valuation and view
We expect DEWH to report consolidated earnings CAGR of 22% over FY11-13 with
RoA and RoE of ~1.5% and ~23% respectively. The stock trades at 1.3x and 1.1x its
FY12E and FY13E BV respectively. Maintain
Buy.
August 2011
34

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
Federal Bank
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
FB IN
171
355
1.3
501/326
-10/10/11
YEAR
END
NET INCOME
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
BV
(INR)
P/BV
(X)
P/ABV
(X)
ROAA
(%)
ROAE
(%)
3/10A
3/11A
3/12E
3/13E
19,417
22,634
25,514
29,113
4,645
5,871
7,099
7,898
27.2
34.3
41.5
46.2
-7.2
26.4
20.9
11.3
-
10.3
8.5
7.7
272
297
327
359
-
1.2
1.1
1.0
-
1.2
1.1
1.0
1.1
1.2
1.3
1.2
10.3
12.0
13.2
13.4
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Federal Bank plans SME-driven loan growth strategies
Leveraging its strong expertise of SME lending in Kerala, the Federal Bank (FB)
management plans to grow SME loans aggressively in Punjab, Maharashtra, Gujarat,
Karnataka and Tamil Nadu. FB has set up SME credit hubs and retail credit hubs in
major centers for faster loan processing.
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
For FY12 the management expects to grow loans by 18-20% YoY and deposits by
21-22%.
NRI deposits a focus area
On the deposit front, FB might focus more on NRI deposits and improve its liability
profile. It is also targeting rich belts of NRI deposits in North and West India, such as
Punjab and Gujarat, to provide impetus to its NRI business.
About 80% of FB's NRI deposits come from the Middle East and it has ~7% market
share of NRI remittances
NRI deposits provide float money and wealth management opportunities.
Currently, FB's CASA ratio is 27% and including the low-cost NRI deposits the ratio
is 33-34%. The management aims to increase this to 40% led by new products and
by improving efficiency.
Asset quality to remain stable
Improvement in credit monitoring and control, automation and new and improved
processes will control delinquencies going forward.
As on 1QFY12, gross NPAs were ~3.9% driven by sequentially higher slippages.
However, at net level, NPAs were at 0.7% as PCR was healthy at ~82%.
The management expects asset quality to be healthy and does not expect a negative
surprise on that front.
Margins to moderate but remain higher than peers
Margins declined sharply by ~60bp over the past three quarters to 3.87%.
The management expects some more moderation in margins from current levels
and expects margins to be 3.7-3.8% in FY12.
Other details
FB plans to scale up its branch network to 1,000 by the end of 2012 from 746
branches as on 1QFY12. Branch expansion is likely to focus more in North and West.
Valuation and view
We estimate EPS of INR41.5 in FY12 and INR46.2 in FY13. We estimate BV of
INR327 in FY12 and INR359 in FY13. The stock trades at FY12E P/BV of 1.1x and
PBV of 1x FY13E. Maintain
Buy.
35
August 2011

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
HDFC
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
HDFC IN
1,470
643
20.7
780/582
4/11/12
YEAR NET INCOME
END
(INR M)
PAT
(INR M)
ADJ. EPS
(INR)
EPS
GR. (%)
AP/E*
(X)
ABV*
(INR)
P/BV
(X)
AP/ABV*
(X)
ROAA CORE ROE
(%)
(%)
3/10A
3/11A
3/12E
3/13E
42,978
53,181
62,264
74,468
28,265
35,350
41,332
49,550
19.7
24.1
28.2
32.6
22.7
22.4
16.9
15.6
-
19.8
16.1
12.7
80.4
91.3
106.7
116.0
-
5.4
4.8
3.8
-
5.2
4.2
3.6
2.7
2.9
2.8
2.8
24.8
26.4
26.2
27.4
* Price is adjusted for value of key ventures. BV is adj by deducting invt in key ventures from NW
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Outlook for mortgage financing remains positive
HDFC remains optimistic about longterm demand for housing finance as India's
mortgage to GDP ratio is 9% v/s 80%+ in developed countries like UK and USA.
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
Key growth drivers are: (1) increasing affordability due to rising disposable income
- average house value has fallen from 22x annual income in 1995 to 4.8x in 2011,
(2) rising urbanization - to increase from ~31% in 2011 to 40% by 2030, and (3)
favorable demographics - average age of home buyers is 35 years, and currently,
~60% of India's population is below the age of 30.
Growth momentum remains healthy
Higher disbursements seen in tier-II and tier-III cities, as affordability in metros
such as Mumbai and Delhi has reduced. Prices in these cities are stabilizing, but are
unlikely to reduce considerably.
In 1QFY12, sanctions and disbursements grew at a healthy pace of 22% YoY and
20% YoY, respectively. Overall AUM grew by 21% YoY.
Business growth in the current quarter so far has been in line with 1QFY12, which
should translate into ~20% YoY asset growth in 2QFY12.
For FY12, the management expects to grow its loan book by 18-20%.
Spreads likely to remain stable
The company was able to sustain its spread at ~2.3% in 1QFY12. The management
expects spreads to remain within the historical band of 2.15-2.35%.
HDFC has hiked its lending rates by ~100bp in the current quarter and still has
headroom for another 50bp increase.
Other highlights
HDFC has tied up with IndusInd Bank for sourcing loans.
During the year to date period, HDFC has sold loans worth INR12.5b to HDFC Bank.
For the full year, this could be INR50b-60b.
Keen on listing the life insurance arm, but not anytime before March 2012.
Asset quality is likely to remain stable. Portfolio mix would remain steady, with
developer exposure at 10-14%.
Valuation and view
We expect HDFC to record an EPS of INR28 in FY12 and INR33 in FY13, translating
into EPS CAGR of 16% over FY11-13. Core RoE would be over 26% and RoA would
remain steady at ~2.8%. The stock trades at 4.2x FY12E and 3.6x FY13E adjusted
BV (price adjusted for value of key ventures and book value adjusted for investment
in those ventures). Valuations remain rich. Maintain
Neutral.
August 2011
36

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
HDFC Bank
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
HDFCB IN
467
453
4.6
520/396
3/16/13
YEAR NET INCOME
END
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
BV
(INR)
P/BV
(X)
P/ABV
(X)
ROAA
(%)
ROAE
(%)
3/10A
3/11A
3/12E
3/13E
123,695
148,783
176,646
216,497
29,487
39,264
51,618
64,256
12.9
16.9
22.2
27.6
22.1
31.0
31.5
24.5
-
30.3
23.0
18.5
94.1
109.1
126.1
147.3
-
4.7
4.1
3.5
-
4.9
4.2
3.6
1.5
1.6
1.7
1.7
16.1
16.7
18.9
20.2
* Includes pro forma merged figures for HDFC Bank and CBoP
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
To grow 5-7% faster than industry average
The management maintains its guidance of higher than industry average growth;
hence HDFC Bank's market share should increase further. It estimates industry growth
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
at 18% and its own growth at ~25% for FY12.
Growth is more likely to be driven from business banking and secured retail loans,
while CV and auto loans are likely to slowdown. The management sounded more
confident about growth in its retail loan portfolio, as the risk perception in this
segment has improved considerably.
The corporate book should continue to be working capital-driven, with low project
finance exposure.
Margins to remain superior
HDFC Bank has been able to maintain its margins (on total assets) in the range of
3.9-4.3% across cycles and the management expects this trend to continue.
Despite increase in the savings deposit rate impacting cost of funds by 10-15bp the
bank has been able to protect its NIM at ~4.2% largely due to its well-matched
asset-liability duration and effective passing of rising cost of funds to customers.
Slippages and credit cost for FY11 lowest since FY05
The management does not see any pressure on its retail loan book and expects
asset quality to remain robust in FY12. In FY11, slippage ratio had declined to 1.1%
as against the last five-year average of 2%+.
Further, on a conservative basis, the bank also made floating provisions of INR6.7b
in FY11 to create adequate cushion and absorb any negative shocks. The
management mentioned that it will continue to provide for counter-cyclical buffer.
Overall credit cost is likely to remain at 1-1.2%.
Other highlights
Fee income growth is likely to moderate to 10-15% in FY12 as against 15-20%
earlier due to lower contribution from income from third-party product distribution.
Income from forex and derivatives is likely to grow 18-20%.
Opex is likely to grow in line with revenue and the management has guided cost-to-
income ratio of 47-48%. The bank expects to add 200-250 branches in FY12.
Valuation and view
While we remain positive on the bank's business, we believe valuations are rich. Over
FY06-11, the peak one-year forward P/BV was 5x and the average one-year forward
P/BV was 3.4x. The stock trades at 3.5x FY13E BV and 18.5x FY13E EPS.
Neutral.
August 2011
37

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
ICICI Bank
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
ICICIBC IN
1152
851
21.4
1277/825
-8/-7/-3
YEAR
END
NET INC.
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
AP/E*
(X)
ABV*
(INR)
AP/ABV*
(X)
CORE
ROAE (%)
ROAA
(%)
3/10A 155,920
3/11A 156,648
3/12E 188,029
3/13E 229,498
40,250
51,514
64,169
76,062
36.1
44.7
55.7
66.0
6.9
23.9
24.6
18.5
-
19.0
15.3
12.9
-
14.4
11.4
9.3
348
365
399
442
-
1.8
1.6
1.4
10.1
12.2
14.1
15.1
1.1
1.3
1.5
1.5
* Price adjusted for value of key ventures and BV adjusted for investments in those key ventures
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Focus to continue on 5Cs strategy
ICBK will continue to focus on growth strategy and at the same time will focus on its
5C's (credit growth, cost efficiency, CASA, credit quality and Customer centricity)
Management mentioned that current level of RoA of 1.4% has some room for
improvement from margins, opex and lower provisions.
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
Credit growth:
Balance sheet growth is likely to be ~18%; with equal contribution
from domestic and overseas business. Within domestic: corporate and secured
retail loans (Auto and Home loans) remains a key focus area.
Cost efficiency:
Operating expenses are likely to grow 20%, and ICBK expects to
maintain cost to average assets at 1.7% and Cost to Income ratio at 40-42% on
long term basis.
CASA:
Focus remains on retail liability driven growth strategy. Management expects
to maintain CASA at 40% on a long term basis.
Credit quality:
Credit quality is gradually improving with net accretion to NPAs
coming down and management does not expect any issues in the near future.
Continues with guidance of 80bp credit cost in FY12.
Focused on de-risking the portfolio
ICBK UK has scaled down investments in bonds/notes of financial institution from
USD2.1b as of 1QFY10 to USD640m as of 1QFY12. They do not have any exposure
to peripheral European countries.
Credit derivative exposure (including off balance sheet) has been scaled down to
INR21.3b from INR54.1b. In case of derivative exposure, underlying comprises of
Indian corporates.
Other highlights
Overseas margins are expected to improve from 90bp as of 1QFY12 to 125bp by
end of the year led by re-pricing on the liability side. Management expects domestic
margins to remain at current levels however there remains an upward bias in FY13
led by fall in securitization losses. For FY12, it expects NIM of 2.6%.
Fee income growth is likely to remain in-line with asset growth with the focus on
transaction banking, Forex / derivatives and remittance fees. However, growth in
corporate fees would depend on movement in new project announcements and
financial closures.
Valuation and View
Adjusted for FY13 based subs value at INR236/share (post 20% holding company
discount), stock trades at 1.4x FY13E ABV (adjusted for investment in subs) and 9.3x
FY13 EPS.
Buy.
August 2011
38

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
IDBI Bank
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
IDBI IN
985
108
2.3
202/103
-7/-8/-7
YEAR
END
NET INCOME
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROA
(%)
ABV
(RS)
P/ABV
(X)
3/10A
3/11A
3/12E
3/13E
45,578
64,125
69,532
79,356
10,311
16,503
18,300
20,499
14.2
16.8
18.6
20.8
20.0
17.8
10.9
12.0
-
6.5
5.8
5.2
-
0.8
0.8
0.7
13.2
15.8
13.7
14.0
0.5
0.7
0.7
0.7
101
118
126
142
-
0.9
0.9
0.8
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Asset quality pressure to abate in 2HFY12
During 1QFY12, gross slippages were INR6.2b (annualized slippage ratio of 1.6%).
Higher slippages were led by the SME segment (~50% of total slippages) due to
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
sub-optimal backend processes.
While slippages could remain high in 2QFY12 as bank further improves its back-end
process it is expected to decline significantly in 2HFY12. Management has guide for
slippage ratio of 1.3-1.5% as against 1.4% in FY11.
Consolidating growth to improve balance sheet profile
IDBI Bank is focusing on reducing the proportion of bulk business and is accordingly
guiding loan book growth of 15% and deposit growth of 12-15%.
On the asset side, the focus would be on SME and retail housing loans, which are
relatively higher yielding, while on the liabilities side, the bank intends to focus
more on CASA deposits and retail term deposits.
IDBI Bank had introduced schemes such as waiver of minimum balance and service
charges, which bore fruitful results, with the bank adding 1.4m savings accounts in
the last one year. IDBI Bank expects CASA ratio to improve to 20% in FY12 and to
25% by FY13 from ~17% in 1QFY12.
Margins to trend upwards
In a favorable interest rate scenario, IDBI Bank has been able to gradually improve
its margins over the past three years from 0.4% in 1QFY09 to 2% in 1QFY12,
despite a large proportion of bulk business.
Going forward improving liability profile and increasing proportion of high yielding
loan would provide cushion to NIMs. Management has guided for NIM of 2.2% and
2.6% for FY12 and FY13 respectively as against 2.1% in FY11.
Other highlights
Fee income growth is likely to moderate to 12-15% on the back of moderation in
loan growth and higher base catching up.
The management targets RoA of 0.9% for FY12 and 1%+ for FY13.
Valuation and view
While IDBI Bank's NIM has improved from 1.3% in FY10 to 2%, it still remains one of
the lowest in the industry. The bank is in the process of restructuring its balance
sheet and is willing to sacrifice growth to improve profitability parameters. However,
in our view, the high share of bulk deposits and low CASA ratio remains a risk.
IDBI Bank has some strategic investments which we have not considered in our
valuations. The stock trades at 0.7x FY13E ABV.
Neutral.
August 2011
39

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
IDFC
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
IDFC IN
1463
113
3.6
218/104
-7/-8/-28
YEAR
END
NET INCOME
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GROWTH (%)
P/E
(X)
ABV
(INR)
AP/ABV
(X)
ROAA
(%)
CORE
ROE (%)
3/10A
3/11A
3/12E
3/13E
21,091
25,455
29,371
34,917
10,623
12,817
14,697
17,678
8.2
8.8
9.7
11.7
41.1
7.4
10.9
20.3
-
12.9
11.7
9.7
42.1
60.7
71.6
80.4
-
1.5
1.3
1.1
3.4
3.2
2.8
2.8
17.6
17.8
15.3
16.1
* Adjusted for Goodwill and Investment in subsidiaries , Prices adjusted for other ventures
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Outlook on macro economic environment
The current macro environment remains challenging, with concerns over project
execution and procedural delays on account of uncertainty over regulatory clearances.
Concerns over fuel supply and procedural delays need timely policy action.
Despite the situation worsening, no further action on the government's part could
create significant pressure, derail the growth cycle, and worsen asset quality.
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
Medium-term growth outlook maintained
Sanctions and disbursals declined by over 50% YoY during 1QFY12, partly due to
slowdown in overall activity and partly due to the high base of the previous year.
For FY12, the management has guided 15% growth. It maintains its medium-term
target of achieving a balance sheet size of INR1t by 2014 (CAGR of ~28%).
In the roads sector, some traction is being seen due to new projects awarded.
However, it could translate into funding opportunity after a lag of 2-3 quarters.
Spreads likely to be maintained
In 1QFY12, IDFC maintained its spread at 2.2%. Going forward, the management
does not expect significant pressure on spreads, as (1) IDFC refrains from growing
aggressively, and (2) banks are raising their lending rates, reducing the overall
competitive pressure.
Asset quality will remain a monitorable
IDFC's exposure to state utilities remains negligible, and while its exposure to the
power sector is ~43% of its total exposure, there are no major signs of stress, yet.
The management is cognizant of the current uncertainties in the sector and remains
cautious, as macro risks persist.
Other highlights
Outlook on capital market related businesses continues to be weak and increased
competitive intensity is impacting profitability.
On the principal investments front, IDFC has investments of INR10b-12b in unlisted
companies.
Valuation and view
Moderation in asset growth and lower income from the capital market related businesses
is likely to impact return ratios in the near term. We expect IDFC to report an EPS of
INR9.7 in FY12 and INR11.7 in FY13, translating into an EPS CAGR of 15.5% over FY11-
13. The stock trades at 1.3x FY12E and 1.1x FY13E ABV.
Neutral.
August 2011
40

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
IndusInd Bank
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
IIB IN
466
237
2.4
309/181
-2/12/17
YEAR
END
NET INCOME
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
BV
(INR)
P/BV
(X)
P/ABV
(X)
ROAA
(%)
ROAE
(%)
3/10A
3/11A
3/12E
3/13E
14,399
20,902
27,340
35,097
3,503
5,773
7,524
9,421
8.5
12.4
16.1
20.2
104.2
45.3
30.3
25.2
-
19.1
14.6
11.7
53
82
95
111
4.5
2.9
2.5
2.1
-
2.9
2.5
2.2
1.1
1.4
1.5
1.5
19.5
19.3
18.2
19.6
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
IndusInd Bank to sustain margins above the industry
High interest rates and moderation in economic growth are likely to see systemic
credit growth decelerating to 17-18%. While some new projects have been deferred,
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
the pull in working capital is strong.
IndusInd Bank's (IIB) management expects to leverage its niche expertise and on a
lower base expects loan growth to be ~25%.
While there has been some moderation in demand in the new CV segment, IIB has
tried to de-risk its growth by incrementally lending in the used CV segment (4-5
years old), where demand is strong.
Higher working capital requirement and the consumer finance segment are expected
to drive FY12 loan growth. The management intends to increase its consumer finance
book to ~50% from ~45% in 1QFY12.
Margins to moderate in 2QFY12
A sharp rise in the cost of deposits (+68bp QoQ) led to a 10bp decline in reported
margins to 3.4%.
The management expects margins to remain under pressure in 2QFY12 as the lag
impact of deposit re-pricing continues. However stabilization in the cost of deposits
and continuous re-pricing of loans will keep margins stable/ improving in 2HFY12.
Asset quality to remain healthy
1QFY12 annualized slippage ratio was ~1.1% against ~0.9% in FY11. Higher
slippages came from the consumer finance division segment, where slippage ratio
was 1.96%.
The management stated that its strategy of keeping away from stress sectors like
unsecured retail, real estate, textiles and white goods has put it in a comfortable
position as far as delinquencies were concerned.
While stress at the lower end of the SME segment is visible, its exposure is largely
backed by collateral, which reduces the risk of default.
IIB's exposure to the infrastructure segment is largely towards working capital
requirement (~90%) and to companies where the project is up and running, hence
there are no reasons for concern.
Valuation and view
Superior margins, focused fee income strategy and control over C/I ratio will keep
core operating profitability strong. Improving liability franchise, structural
improvement in RoA and 25%+ asset growth should help IIB to post one of the
highest PAT growths (~28%) among banks under our coverage. The stock trades at
2.5x FY12E and 2.1x FY13E BV, and at 14.6x FY12E and 11.7x FY13E EPS.
Buy.
August 2011
41

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
ING Vysya Bank
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
VYSB IN
150
306
1.0
444/283
-4/10/-4
YEAR
END
NET INCOME
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
BV
(INR)
P/BV
(X)
P/ABV
(X)
ROAA
(%)
ROAE
(%)
3/10A
3/11A
3/12E
3/13E
14,501
16,615
19,172
22,643
2,423
3,187
4,211
5,116
18.5
26.3
28.2
34.3
0.6
42.3
7.1
21.5
-
11.6
10.9
8.9
185
208
257
287
-
1.5
1.2
1.1
-
1.5
1.2
1.1
0.7
0.9
1.0
1.0
11.6
13.4
13.3
12.6
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
SME loans, mortgages to be key loan-growth drivers
With systems and processes in place and legacy issues behind, ING Vysya Bank
(VYSB) intends to grow its loan book by 1.2-1.3x the industry average.
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
The bank intends to focus on high yielding SME loans and secured retail segment
for its growth. It expects to leverage its relationship with ING Global to deepen its
relationship with large corporate houses.
On a pilot basis VYSB has begun to disburse loans in the CV segment (fleet operators)
and the unsecured personal loan segment. However it does not expect it to be a
major growth driver in the near term.
Higher fee income contribution and lower cost to income to drive profitability
Management expects to increase its fee income contribution from 30-32% currently
to 35%, by launching new product launches and higher cross-selling.
Bank over the past few years have invested heavily in technology and expects to
reap its benefit in coming years. Management expects cost to income ratio to decline
to low 50's over next three to four years (from 62% in FY11 and 73% in FY08) led
by increased traction in core income.
Margin guidance of 3-3.2; Asset Quality to remain healthy
While margins declined 30bp in 1QFY12 to 3%, management expects stabilization
in cost of deposits and improvement in yield on loans will provide cushion to margins.
It has guided for margins of 3-3.2% for FY12.
Bank has not witnessed any significant pressure on asset quality and expects it to
remain healthy. However with uncertain environment it prefers to be cautious rather
than chase growth. With lower slippages and PCR at 84% management expects
credit cost to decline from 0.8% in FY11.
Expanding horizon to cover all India
VYSB is predominantly a south-based bank, however the management expects to
increase its branch network in the northern and western regions and consolidate its
position in the south.
A large part of the branch increase will be in metros, urban and tier-I cities as it has
a strong presence rural and semi-urban areas. The management expects new
branches to break even in 12-18 months and the cost-to-income ratio for new
branches will converge with the bank's overall cost-to-income ratio in 3-4 years.
Valuation
We expect EPS CAGR of ~14% over FY11-12. EPS will be INR28in FY12 and INR34
in FY13. We expect BV of INR257in FY12 and INR287 in FY13. The stock trades at
1.1x FY13E BV and 8.9x FY13E EPS.
Buy.
August 2011
42

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
Kotak Mahindra Bank
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
KMB IN
738
430
6.9
530/333
1/16/11
YEAR
END
NET INCOME
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
BV
(RS)
P/BV
(X)
P/ABV
(X)
ROAA
(%)
ROAE
(%)
3/10A
3/11A
3/12E
3/13E
49,017
54,168
64,633
77,461
12,382
14,948
17,099
20,086
17.8
20.3
23.2
27.3
87.8
14.1
14.4
17.5
-
21.2
18.5
15.8
114
149
173
202
-
2.9
2.5
2.1
-
3.0
2.5
2.2
2.7
2.4
2.2
2.1
18.1
16.6
15.5
15.7
Net Income and PAT Consolidated Ex life Insurance
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
KMB FY12 loan growth to be higher than the industry's
Kotak Mahindra Bank (KMB) expects FY12 loan growth to be faster than that of the
industry at ~30% (1QFY12 consolidated loan book grew 36% YoY and 8% QoQ).
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
The focus will be on corporate and secured retail loans. Among retail loans, home,
car and CV loans are likely to be growth drivers.
In 1QFY12 NIMs declined ~30bp QoQ to 5% due to rising cost of funds. However,
the management expects to sustain NIM at ~5% and margins are unlikely to fall
significantly below this level.
Margins under pressure, but unlikely to fall below 5%
Asset quality expected to be stable
In 1QFY12 consolidated gross NPAs were largely flat QoQ.
The management expects asset quality to be healthy due to a higher share of
collateralized loans and improved risk management practises.
However, a steep increase in policy rates resulting in an economic slowdown could
pose a threat to asset quality.
Weak outlook on capital market-related businesses
The broking industry continues on the path of fragmentation and margin pressures
still remains. The management sees consolidation in this space but it is still early
days.
No major IB deals are taking place, but KMB has a quality IB franchise that can help
it to develop corporate banking business.
The outlook for capital market-related businesses remains weak and the management
does not expect the situation to improve in the near term.
Other highlights
The life insurance business turned profitable and does not require major capital
infusion. So far, INR 5.6b has been infused as capital in this business.
Excess capital is adversely affecting RoEs (bank standalone tier-I ratio 16%)
KMB is considering acquisition as an option, but will not acquire anything or lend
aggressively to consume capital and improve return ratios.
Valuation and view
The lending business is expected to be the largest (75%+; ~80% in 1QFY12)
contributor to profitability. We expect the bank to report ~27% loan CAGR over
FY11-13. We expect earnings CAGR (ex-insurance) of 16% over FY11-13. The stock
trades at 2.1x FY13E BV and 15.8x FY13E EPS (adjusted for value of the insurance
business). Valuations are rich, maintain
Neutral.
August 2011
43

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
Manappuram Finance
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
MGFL IN
834
50
0.9
95/42
2/-10/-3
YEAR
END
NET INCOME
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROA
(%)
3/08A
3/09A
3/10A
3/11A
880
1,734
3,413
8,489
279
478
1,197
2,820
0.7
1.1
2.9
6.8
-
71.2
150.5
136.1
-
-
-
7.5
-
-
-
1.1
68.4
31.2
27.9
22.0
5.4
3.8
5.0
5.0
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Growth likely to remain strong
In 1QFY12 Manappuram Finance's (MGFL) disbursements grew 42% QoQ and gold
loan AUMs grew 20% QoQ.
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
The 20% QoQ increase in gold loan AUMs could be broken down into a 13% volume
increase and ~7% value increase.
Notwithstanding the current macro-environment, the management maintained its
guidance of reaching INR120b AUM (INR90b as on June 2011) by FY12 translating
into YoY growth of ~60%.
Plans to add 500 branches in FY12
The management expects to add 500 branches in FY12, of which 216 new branches
were added in 1QFY12.
Branch addition for the year is likely to be front loaded.
Of the total, 300 new branches are likely to be added to support business
requirements of existing branches.
Margins likely to remain stable
The management is confident of maintaining margins at 1QFY12 levels if policy
rates remain at current levels.
Incremental cost of borrowings is 12.5-13% and yields are at ~26%.
Asset quality likely to remain healthy
Gross NPAs in 1QFY12 were 0.5% v/s 0.3% in 4QFY11.
The management expects asset quality to remain healthy. A steep increase in gold
prices will provide cushion in terms of asset quality.
Other highlights
Margin compression in 1QFY12 is likely to be made up by a decline in the opex-to-
asset ratio.
The management expects to bring down the opex-to-asset ratio to ~6% from 7% in
FY11 and targets to maintain RoA at ~4.5%.
With CAR of 22%, MGFL remains adequately capitalized to achieve the desired
growth rate.
Valuation and view
We believe MGFL is well positioned in a niche business segment and has the domain
expertise and the required platform to scale up its business to the next level. However,
regulatory uncertainty securitization of assets could be an overhang on the stock.
Not Rated.
August 2011
44

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
Muthoot Finance
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
MUTH IN
372
181
1.5
198/150
14/-/-
YEAR
END
NET INCOME
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
P/ABV
(X)
ROE
(%)
ROA
(%)
3/08A
3/09A
3/10A
3/11A
1,888
3,106
6,157
12,832
636
977
2,276
4,942
2.0
3.1
7.1
15.4
44.6
53.7
132.9
117.1
-
-
-
11.5
-
-
-
4.2
-
-
-
4.3
34.2
34.0
48.1
51.5
3.2
2.9
3.7
3.9
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Growth outlook remains strong
Muthoot Finance (MUTH) witnessed robust growth in 1QFY12, with gross retail AUM
growing by 97% YoY and 13% QoQ to INR179b.
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
For FY12, the management has guided gross retail AUM growth of 40-50%. The
QoQ growth trend of 10-12% is likely to continue.
Margins likely to remain stable
In 1QFY12, MUTH reported a margin of 11.2% as compared with 10% in 1QFY11
and 10.86% in FY11. The management does not expect significant margin pressure,
as it has been able to pass on the increase in its cost of borrowings.
The average lending rate currently stands at 21% v/s 19% a year ago.
The withdrawal of PSL status on bank loans to NBFCs and withdrawal of agri loan
status for bank loans to NBFCs for on-lending against gold jewelry has resulted in a
50bp increase in MUTH's cost of borrowings.
Branch expansion plans
The company has added more than 1,200 branches in the last one year and over
260 branches in 1QFY12, taking the total branch network to 3,100+.
MUTH plans to add 700 branches in FY12.
Asset quality likely to remain healthy
Gross NPAs in 1QFY12 remained stable QoQ at 0.3%.
The management expects asset quality to remain healthy, given that the loan to
value (LTV) ratio is comfortable at ~72%.
Given the steep increase in gold prices, MUTH remains cautious and is maintaining
lower LTV, which provides cushion on the asset quality front in case of fall in gold
prices.
Other highlights
The company expects to maintain RoA at 4-4.5%.
Current leverage stands at 6.8-6.9x. The management is comfortable with leverage
of 7.5-8x.
Valuation and view
We believe MUTH is strongly positioned in a niche business segment and has domain
expertise and the required platform to scale up the business to the next level.
However, regulatory uncertainty hovering around for all NBFCs could act as an
overhang in the near term.
Not Rated.
August 2011
45

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
Rural Electrification Corporation
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
RECL IN
987
175
3.8
410/163
-7/-14/-35
YEAR
END
NET INCOME ADJ PAT
(INR M)
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
BV
(INR)
P/BV
(X)
ROAA
(%)
ROAE
(%)
3/10A
3/11A
3/12E
3/13E
28,115
36,951
42,216
50,141
20,014
25,645
29,020
34,425
20.3
26.0
29.4
34.9
23.3
28.1
13.2
18.6
-
6.7
6.0
5.0
112
129
149
172
-
1.4
1.2
1.0
3.4
3.4
3.2
3.1
22.0
21.5
21.1
21.7
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Asset quality takes center stage
Health of state utilities (~82% of the outstanding loan book) is an area of concern.
RECL now refrains from funding loss making SEBs such as TNEB and MPEB by
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
declining short-term loan proposals to state utilities.
The management is optimistic regarding policy action on this front, given the proposed
reforms announced by the Ministry of Power recently.
The management does not expect a spike in NPAs, though there is a possibility in
some accounts of delay in payments.
No restructuring proposal has been received yet, but RECL does not expect loss of
interest in case accounts get restructured.
Disbursement growth likely to remain healthy
The outstanding sanctions pipeline was INR1.75t. Consequently the management
expects disbursements growth to be 20% YoY.
However, RECL has turned cautious over funding gaps for state utilities through
short-term loan, which would have otherwise boosted company's growth.
Borrowing plan for FY12
Of the total INR280b-300b planned to be raised in FY12, RECL raised INR80b in
1QFY12. Of the balance, the company plans to raise
USD750m in 2QFY12, for which regulatory approvals are in place;
USD750m (second tranche) by March 2012, for which RECL will take RBI's
approval;
USD1b through FCCBs subject to RBI and Ministry of Finance approval.
Cost of foreign currency borrowing (on a fully hedged basis) is likely to be lower
by at least 200bp compared with the domestic cost of borrowing.
RECL to sustain margins at ~4.4%
Higher foreign currency borrowing at a lower rate augur well from margin perspective.
In 1QFY12 margins were steady at ~4.3%. The management guidance is to maintain
margins at ~4.4%.
Valuation and view
With a strong sanctions pipeline (INR1.75t), we expect loan growth to be healthy at
22% CAGR over FY11-13. However, in the current macro-economic environment
asset quality is a bigger concern against fears of slow growth.
The stock trades at P/E of 5x FY13E EPS and 1x FY13E BV. Maintain
Buy.
August 2011
46

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
Shriram Transport Finance
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
SHTF IN
226
599
3.0
900/551
-2/-10/-11
YEAR
END
NET INC.
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
BV
(INR)
P/BV
(X)
P/ABV
(X)
ROA ON
AUM (%)
ROAE
(%)
3/10A
3/11A
3/12E
3/13E
22,491
30,551
35,114
39,537
8,731
12,299
13,676
15,647
38.7
54.4
60.5
69.2
28.7
40.5
11.2
14.4
-
11.0
9.9
8.7
170
217
269
328
-
2.8
2.2
1.8
-
2.8
2.2
1.8
2.8
3.3
3.1
3.0
28.6
28.2
24.9
23.2
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Regulatory uncertainty clouds outlook
Although the RBI has maintained status quo on the priority sector status over
securitized assets for companies like Shriram Transport Finance (SHTF), regulatory
uncertainty clouds the near-term outlook.
Growth guidance maintained
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
In 1QFY12, SHTF posted 22% YoY growth in its AUM to INR 370b. The management
has guided for AUM target of INR420b (translating into 15-16% YoY growth in FY12).
The management has indicated that FY12 asset growth could slowdown to 12-15%.
However, they would re-visit their guidance only after 1HFY12, once more clarity
emerges over macro issues. However, the management remains confident of growing
at faster pace than the industry.
Disbursement trends have been better than expected in June and July, though not
quantified by the management.
Asset quality likely to remain healthy
In 1QFY12 gross NPAs increased 14% QoQ, which was largely seasonal in nature.
The management is not unduly worried about the asset quality as it believes that
the freight rates are holding up and no major stress has been witnessed so far.
Regarding ongoing issues pertaining to transport irregularities in mining areas, SHTF's
exposure is negligible and is running off.
Margins likely to remain under pressure
Withdrawal of priority sector status on loans given by banks to NBFCs by the RBI has
resulted in an increase in SHTF's borrowing costs.
Reported NIM during 1QFY12 improved by 26bp to 7.91%. The management expects
margins to remain steady at current levels. However, change in securitization norms
for NBFCs could act as a drag on margins.
Other highlights
The management expects to maintain its RoE at 27-28%. However, the management
remained confident that even in case of complete disallowing of securitization by
NBFCs the RoE's are unlikely to fall below 23-24%.
Valuation and view
We expect SHTF to report EPS of INR61 and INR69 in FY12 and FY13 respectively
with superior RoAs of ~3% (including off books loans). The stock trades at 2.2x and
1.8x its FY12E and FY13E ABV respectively. While return ratios remain strong,
concerns over slowdown in growth and uncertainty from the regulatory perspective
could weigh on the stock performance in the near term. Maintain
Buy.
August 2011
47

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
State Bank of India
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
SBIN IN
635
2,062
28.6
3515/2008
-5/-14/-15
YYEAR NET INCOME
END
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
BV
(INR)
P/BV
(X)
P/ABV
(X)
ROAA
(%)
ROAE
(%)
3/10A 386,396
3/11A 483,510
3/12E
3/13E
91,661
82,645
144.4
130.2
176.5
234.1
184.8
168.3
225.9
304.2
-
11.8
8.7
6.5
1,268
1,268
1,452
1,702
-
1.6
1.4
1.2
-
1.8
1.5
1.3
0.9
0.7
0.9
1.0
14.8
12.6
16.2
18.8
574,286 112,096
666,773 148,657
* Valuation multiples are adjusted for SBI Life's value
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Focus to be on quality growth rather than market share
The management is willing to sacrifice market share to protect its margins. It has
increased its base rate by ~200bp over the last 8 months to 10%.
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
While it estimates systemic credit growth to be 18%, it remains confident of achieving
16-18% loan growth for itself in FY12.
Maintains NIM guidance of 3.5% for FY12
In 1QFY12 SBI reported 55bp improvement in margin driven by (1) higher CASA
share coupled with re-pricing of high cost deposits and (2) increase in lending rate.
Further INR350b of high cost deposits (9.5-10.5% raised in FY08) is likely to come
for re-pricing which will help the bank to contain cost of funds.
However in 2HFY12 with bulk of re-pricing behind management expects margins to
moderate, but remains confident of maintaining NIM at 3.5%+ for FY12.
Asset quality a key focus area for the bank
Asset quality remains a concern, with slippages at elevated levels. SBI has reiterated
its focus on improving risk management practices.
Stress in the corporate segment has reduced considerably. However, the trend in
SME and retail loans needs to be watched.
Higher upgradations and recoveries in 2HFY12 will lead to improvement in asset
quality and will help to contain NNPA below 1.5% in FY12.
One-off provisions behind; expect provisions to decline
With one-off provisions for change in NPA guidelines and restructured loans behind
(one-off provisions that remain to be made are INR5.5b), provisions are likely to
decline substantially.
Further, increase in pension liability was a one-off and is not likely to recur. The
impact of pension liability was larger, as the wage hike was implemented with
retrospective effect from November 2007. The bank is now likely to provide for such
hikes on an ongoing basis - at least partially. Hence, a negative surprise on this
count is unlikely.
Other highlights
Government to infuse capital and expects to receive the same in FY12.
For FY12, SBI expects fees to grow slower than asset growth.
Valuation and view
As SBI regains investor confidence through stable margins at 3.5%+ and improvement
in asset quality (key catalyst in the rest of FY12), valuations could improve from current
levels of 1.2x FY13E consolidated BV.
Buy.
August 2011
48

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
UCO Bank
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
UCO IN
628
69
0.9
152/62
-10/-23/-29
YEAR
END
NET INCOME
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
P/ABV
(X)
ROE
(%)
ROA
(%)
3/08A
3/09A
3/10A
3/11A
22,599
26,646
32,901
47,703
4,122
5,577
10,122
9,065
5.2
10.2
18.4
12.2
30.4
96.9
81.5
-34.0
-
-
-
5.7
-
-
-
0.8
-
-
-
1.1
17.9
21.3
31.6
17.4
0.5
0.6
0.8
0.6
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
UCO consolidates balance sheet for profitable growth
UCO Bank's (UCO) new management (Mr Arun Kaul joined in September 2010)
identified four challenges (liability franchise, assets, HR and business process) that
were hurdles in improving the bank's operating metrics and is taking remedial steps
so that the bank can post sustained, profitable growth.
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
The management intends to de-bulk (70% of the book towards corporate loans and
30%+ bulk deposits) its balance sheet and focus more on SME and retail segments
on the assets side and retail deposits and CASA deposits on the liabilities side.
Focus on CASA deposits
Reliance on bulk deposits for rapid growth in the past (31% CAGR over FY07-10),
slow branch and ATM roll out and backwardation in technology led CASA ratio to
decline from 29% in FY07 to 22% in FY11.
With systems and processes in place and the bank on a 100% CBS platform, UCO is
leveraging its position by offering new products and increasing customer acquisitions.
Further it aims to increase its branch and ATM network from 2,200 and 800 to 3,000
each by end of FY13 respectively. The new branches and ATM's are being opened to
target new growth areas and increase brand visibility.
De-bulking of the balance sheet and improved product have led CASA ratio to improve
to ~26% in 1QFY12 and the management expects it to improve further.
Strengthening of the system and process
Slippages over the past few quarters have been at en elevated level (2% in 1QFY12
and 3.3% in FY11 against 1.6% in FY10) as UCO continued to clean up its balance
sheet and migrated its portfolio (INR0.5m and above) through system-based
recognition of NPAs.
UCO is expected to transit its remaining portfolio in 2QFY12, which may lead to
further pressure on asset quality, post which slippages is expected to decline.
UCO has tightened its credit appraisal and divided its offices into four major verticals
(headquarters, regional and zonal offices and branches) against three earlier, to
increase the monitoring and selection process.
As far as stress assets are concerned, UCO has established a separate recovery cell
and 5-6 separate branches will focus only on recovery of bad assets.
Valuation and view
The management is taking steps to improve UCO's asset and liability profile, which
in turn helps in improving margins. Near term asset quality pressure is likely to
continue due to system-based NPA recognition. The stock trades at 0.8x PBV and
5.7x PE FY11.
Not Rated.
August 2011
49

Sector:
Banking, Finance & Insurance
7th Annual Global Investor Conference
Yes Bank
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
YES IN
348
266
2.0
388/234
-6/8/-9
YEAR
END
NET INCOME
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
BV
(INR)
P/BV
(X)
P/ABV
(X)
ROAA
(%)
ROAE
(%)
3/10A
3/11A
3/12E
3/13E
13,635
18,702
24,200
31,467
4,777
7,271
9,285
11,473
14.1
20.9
26.7
33.0
37.5
48.9
27.7
23.6
-
12.7
10.0
8.1
91
109
132
160
-
2.4
2.0
1.7
-
2.4
2.0
1.7
1.6
1.5
1.4
1.3
20.3
21.1
22.2
22.6
Covering Analyst(s):
Alpesh Mehta
+91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Key Takeaways
Management's cautious approach to moderate loan growth
Yes Bank's change in strategy of being cautiously optimistic instead of aggressively
growth-centric in an uncertain environment augurs well for the bank.
Sohail Halai
+91 22 3982 5430
Sohail.Halai@MotilalOswal.com
The management expects loan growth to be 1.5x of the industry average in the
current fiscal, but its medium-term target of 30-35% YoY growth remains unchanged.
In the near term the key focus area is likely to be corporate and institutional banking
(C&IB, for clients with a turnover >INR20b) and commercial banking (for clients
with turnover of INRs2b-20b) to grow its loan book.
The expanding branch network will help to grow its high yielding branch banking
loans. The bank expects to increase the share of SME and retail loans to 30% by
FY15 from 12% currently.
Improving liability franchise a key focus area
YES is predominantly wholesale funded bank and is focusing on improving its retail
liabilities by branch expansion, new customer acquisition and superior technology.
The bank increased its branch network to 255 from 155 a year earlier. The
management believes that reaching a branch network of 300-400 branches would
be an inflexion point for the strong retail liabilities growth ahead and has guided for
CASA and retail deposits as a percentage of total deposits to increase to 60% from
27% currently. It plans to add 35-40 branches every quarter.
To achieve its objectives YES Bank has hired top three leaders from Axis Bank who
were instrumental in driving their liability strategy, particularly CASA strategy.
Buffer to margins in place, to be 2.8-3% in the near term
YES has no major exposure to consumer lending (carrying a fixed rate of interest)
and ~95% of the loan book is either floating or of short tenor.
As loans are largely on a floating-rate basis, the management is confident of passing
bulk deposit costs to borrowers and maintaining margins of 2.8-3%.
Asset quality robust
Yes Bank's asset quality is robust with GNPA of 0.2% and NNPA at near zero. The
bank has started de-bulking its balance sheet to diversify its risk profile.
With low restructured loans and strong credit appraisal asset quality is expected to
be healthy.
Valuation and view
Key positives for YES are: (1) strong growth, (2) proven execution capabilities, (3)
diversified fee income and (4) superior return ratios. We expect RoA of 1.3-1.4%
and RoE of 22%+. Maintain
Buy.
August 2011
50

Sector:
Cement
7th Annual Global Investor Conference
Grasim / UltraTech
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
GRASIM IN
92
2,108
4.2
2,625/1,981
8/1/12
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EBITDA
EV/TON
(US$)
03/10A 199,334
03/11E* 212,690
03/12E* 229,953
03/13E* 266,578
27,342
18,828
27,712
33,487
298.2
205.3
302.1
365.1
25.0
-31.2
47.2
20.8
7.1
10.3
7.0
5.8
1.5
1.3
1.1
1.0
22.7
13.9
17.5
18.0
23.9
16.5
17.6
19.0
3.4
4.4
4.2
3.3
-
81
81
56
Consolidated; * Demerger of cement business assumed w.e.f. 1 October 2009
Covering Analyst(s):
Jinesh K Gandhi
+91 22 3982 5416
Jinesh@MotilalOswal.com
Key Takeaways
Cement volume growth to recover in 2HFY12, but excess supply to persist
for at least two years
For the cement industry, Grasim expects demand to grow 7.5-8% in 2HFY12, despite
muted growth in 1HFY12, driven by pick-up in infrastructure activity.
It believes that the long-run demand drivers are intact and would drive strong growth
of 8-10% over the next five years.
In the worst case, it expects capacity addition of ~100mt in five years and 30-40mt
over the next two years. However, beyond 100mt, it expects capacity addition to be
very difficult, impacted by tightening of regulatory environment.
The company expects pricing and margins to remain challenging over the next few
quarters. It estimates worst case EBITDA at INR600-650/ton, best case EBITDA at
INR900-1,000/ton and base case EBITDA of INR800-850/ton for FY12.
VSF prices under significant pressure; initial signs of stabilization, as Chinese
players incur cash losses
Sharp correction in competing fiber (cotton and PSF) prices from peak levels of
March 2011 has resulted in VSF prices correcting by INR30-35/kg from the peak of
April 2011 to INR120-125/kg.
There are initial signs of stabilization, as Chinese players are operating at 60%
utilization and incurring cash losses.
This coupled with cotton production in the forthcoming season would be the key
influencing factor for VSF demand and pricing. 2QFY12 demand would be impacted
due to inventory correction in the value chain.
Going ahead with mega capex plans, with investment of INR143.7b
UltraTech is investing INR110b over the next 3-4 years for adding new capacities,
logistics infrastructure and modernization of its plant.
It is setting-up a 9.2mt capacity at Chhattisgarh and Karnataka, along with split
grinding units and packaging terminals. This capacity would be operational in FY14.
Grasim is expanding capacity in VSF by 156,500 tons (greenfield + brownfield). This
is supplemented by caustic capacity addition of 182,500 units. It would be investing
INR33.6b to augment its capacity by 47% to 490,475 tons by FY13.
Other takeaways
The proposed Land Acquisition Bill could result in 6x increase in land cost, thereby
resulting in increase in replacement cost by USD70-75/ton, necessitating
remunerative cement prices.
Post Domsjo acquisition, captive pulp contributes 90-100% of its requirement
currently and 65-70% on expanded VSF capacity (FY14 onwards).
August 2011
51

Sector:
Engineering
7th Annual Global Investor Conference
AIA Engineering
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
AIAE IN
94
343
0.7
480/305
4/15/7
YEAR
END
NET SALES EBIDTA
(INR M)
PAT
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV /
EBIDTA
MAR. (%) (INR M)
Mar-08
Mar-09
Mar-10
Mar-11
5,926
9,216
8,040
9,608
22.3
21.8
22.3
17.8
1,083
1,335
1,226
1,298
11.4
13.8
12.6
13.3
62.7
20.9
-8.6
5.5
-
-
-
28.4
-
-
-
4.2
22.8
22.7
17.6
16.4
31.8
34.3
26.3
24.0
-
-
-
20.3
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
A strong footprint in mining segment; Volume ramp up to drive margins
The AIA Engineering (AIAE) management stated that the global mining segment
has a huge untapped addressable market. The cement and mining segments use
traditionally forged grinding media which is now moving towards new technology of
high cast chrome driven by cost efficiency and better product reliability. Currently
the internal mill consumables market in the mining segment is estimated at 2mmt
and the management expects that out of this 1mmt will move from forged grinding
to high cast chrome media in 4-5 years, providing huge growth potential. AIAE and
Magotteaux are two major players in the high cast chrome media. AIAE expects
Deepak Narnolia
+91 22 3029 5126
Deepak.Narnolia@MotilalOswal.com
volumes of 40,000mt by FY12, 60,000mt by FY13 and 80,000mt by FY14.
However due to a location disadvantage, smaller volumes and entry pricing strategy,
margins are under pressure. Mill internals are consumables and uninterrupted supply
is of utmost importance for customers. Setting up warehouses across geographies
remains AIAE's biggest challenge. In the management's view margins in the next
few quarters will face headwinds due to pricing but the management expects margins
to improve as volumes catch up over the next few quarters.
Cement industry maturing, but margins healthy due to customer preference
The cement industry is showing signs of maturity as markets are flattening. Except
for a few pockets, the management sees limited growth opportunity in the sector.
New capacity in North America and Western Europe has saturated demand, which
is being driven mainly by replacement sales. In the domestic market demand from
new projects is good from new projects and strong from the replacement market.
Foray into new product areas, geographies; Promising growth opportunities
AIAE entered the crushing market, which is a promising area of growth. The
management expects the sector to contribute to revenue by 3QFY12.
AIAE entered vertical mill products in China, which is growing significantly. In FY11
the company sold about 2,500mt and in FY12 AIAE expects to meet the target of
5,000mt. The company expects volumes to grow to about 10-20mt over 3-4 years.
Valuation and view
AIAE has nearly tripled its manufacturing capacity over the past three years, from
65,000 tons a year in FY07. Production was stagnant in FY09 and FY10, before
rising 20% YoY. In the current environment of a global slowdown, the growth outlook
is uncertain. Success in the mining sector is critical for AIAE's long-term growth
sustainability. The stock trades at 16x FY12E consensus EPS of INR23. We do not
have a rating on the stock.
August 2011
52

Sector:
Engineering
7th Annual Global Investor Conference
BGR Energy Systems
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
BGRL IN
72
316
0.5
871/299
-19/-24/-51
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/10A 30,779
03/11A 47,632
03/12E 53,403
03/13E 59,217
2,016
3,230
3,565
3,801
28.0
44.8
49.4
52.7
74.2
59.9
10.4
6.6
-
7.1
6.4
6.0
-
2.4
1.9
1.5
31.7
39.0
32.8
27.4
22.8
24.3
21.6
19.4
-
0.5
0.6
0.6
-
4.7
4.7
4.7
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
Outlook for order intake improving though external environment remains
challenging
Deepak Narnolia
+91 22 3029 5126
Deepak.Narnolia@MotilalOswal.com
BGR Energy Systems (BGRL) expects order inflow to improve in the medium term.
There is significant progress in awards of BoP orders from IPPs (INR2-3b). Visibility
of finalization of the orders from Rajasthan SEB (two projects of 2x660MW each,
which got delayed due to in-sufficiency of coal linkages) has improved. These should
be finalized by the end of 2QFY12.
Price bids for NTPC 2 in September; success in NTPC tenders to improve outlook
for BTG JVs
The management believes that price bids for the NTPC bulk tender 2 (9x800MW),
for which BGRL is pre-qualified will be invited in September 2011.
BGRL is also in the fray for boiler packages of NTPC's 11x660MW bulk tender along
with BHEL and L&T. It expects the price bids to be opened after the Supreme Court
hears Gammon's plea over its disqualification in the next few days.
Construction work in both the JVs (BGRL is spending INR44b over 3.5 years to set up
a boiler and turbine manufacturing facility, with supercritical capability in 660, 700,
800 and 1,000MW ranges through a JV with Hitachi, Japan) is well on schedule and
the boiler JV is likely to commence production by 3QFY13 and the turbine JV in
1QFY14.
Success in NTPC's boiler package for an 11x660MW bulk tender (under arbitration;
price bids due) and NTPC 2 (price bids expected in September 2011) will improve
outlook for the growth of BGRL's manufacturing JVs.
Margins to improve in FY12, driven by better sales mix
In 1QFY12, EBITDA margin expanded due to favorable mix, driven by higher (YoY)
contribution from BoP contracts (40% of power segment sales) relative to EPC
contracts (60% of power segment sales). The trend is likely to continue in FY12 due
to higher weight of BoP contracts in the order book. We expect EBITDA margin to be
12% (up 50bp) in FY12.
Valuation and view
Success in forthcoming tenders is critical for BGRL's growth in FY13. BGRL needs to
book orders worth INR80b-100b in FY12 to grow by 15% in FY13. Our EPS estimates
are INR49.4 (up 10%) for FY12 and INR52.7 (up 7%) for FY13. We expect BGRL to
post revenue CAGR of 12% and earnings CAGR of 9% over FY11-13.
The stock trades at 6x FY12E earnings; valuations are favorable. We recommend
Buy,
with a target price of INR527 (10x FY13E EPS).
53
August 2011

Sector:
Engineering
7th Annual Global Investor Conference
Havells India
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
HAVL IN
125
328
0.9
451/290
1/12/-6
YEAR
END
NET SALES
(INR M)
PAT*
(INR M)
EPS*
(INR)
EPS*
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A
3/11A
3/12E
3/13E
51,626
56,126
63,483
71,380
696
2,747
3,644
4,395
5.6
22.0
29.2
35.2
80.8
294.2
32.7
20.6
58.9
14.9
11.3
9.3
10.2
6.3
4.3
3.3
17.4
42.0
38.2
33.3
7.2
18.3
21.0
20.8
1.0
0.9
0.7
0.6
16.1
9.8
7.1
5.8
* Consolidated nos, pre exceptional
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
Revenue to grow at 10-11%; new products to contribute significantly
The management maintained its consolidated revenue growth guidance of 10-11%
for FY12. We expect consolidated revenue to grow 13% in FY12 and 12% in FY13.
For 1QFY12, Havells India (HAVL) reported standalone revenue of INR8b (up 16%
YoY), driven by strong growth in all segments except switchgear. Switchgear revenue
was impacted by an overhang of a drop in exports of MCP to the UK.
Deepak Narnolia
+91 22 3029 5126
Deepak.Narnolia@MotilalOswal.com
Sylvania reported flattish revenue in 1QFY12 impacted by unfavorable currency
movement in the American region. Europe continues to de-grow (-3% YoY in
1QFY12). The management expects significant growth from LATAM region. We expect
Sylvania to post 6% revenue growth in Euro terms in FY12.
HAVL is in the process of broadening its product portfolio of consumer durables. It
introduced water heaters in 1QFY12, which boosted consumer durables sales
(INR400m of sales of water heaters in 1QFY12 v/s nil in 1QFY11). Launch of further
new products such as geysers, motors, juicers, etc is in the pipeline. Management
expects significant growth from new products in FY12 onwards. In the domestic
market (Standalone business) we expect revenues to grow by 17% YoY in FY12.
Targets exponential growth in switchgear business
The company is targeting to double its revenue from the switchgear business with
its foray into the global market. It is in the process of launching its switchgear in the
UK market and is planning to set its footprint in Chinese markets, as well.
HAVL has a strong foothold in the domestic market, where it competes with
multinationals like Schneider and Legrand. It currently commands 20% market share.
We believe that HAVL is well positioned to extend its strong branding and long
experience in the low voltage switchgear segment to newer geographies.
Current level of margins sustainable in domestic business; turnaround of
Sylvania to provide significant boost to profitability at consolidated level
The management reiterated its earlier expectation of sustaining margins at FY11
levels of 11-12% in the domestic business.
The management expects ~8% EBITDA margin for Sylvania in FY12. Sylvania turned
around from a loss-making unit to a profit-making business in FY11. In 1QFY12
EBITDA margin jumped 190bp YoY to 7.3% and was broadly at 4QFY11 levels.
Valuation and view
Our EPS estimates are INR29.2 (up 33%) for FY12 and INR35.2 (up 21%) for FY13.
We estimate consolidated revenue CAGR at 13% and PAT CAGR at 26% over FY11-
13. The stock trades at 11x FY12E and 9x FY13E consolidated EPS.
Buy
with a
target price of INR491 (14x FY13E EPS).
August 2011
54

Sector:
Engineering
7th Annual Global Investor Conference
Larsen and Toubro
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
LT IN
610
1,564
20.9
2,212/1,463
-2/8/-5
YEAR
END
NET SALES
(INR M)
PAT*
(INR M)
EPS*
(INR)
EPS
GR. (%)*
P/E*
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A 370,348
3/11A 439,049
3/12E 540,808
3/13E 677,059
37,110
42,416
52,077
66,706
61.6
69.7
85.5
109.6
20.1
13.0
22.8
28.1
-
22.5
18.3
14.3
-
4.4
3.8
3.3
20.7
18.3
18.7
19.7
23.1
21.9
22.3
23.0
-
2.2
1.8
1.5
-
17.8
14.7
12.2
Consolidated; EPS is fully diluted
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
Environment challenging but no meaningful adverse impact
The external environment is plagued by a policy logjam and high capital costs. L&T
is experiencing extended award timelines but there is no meaningful adverse impact
on ordering activity. The management said its diversified portfolio was helping L&T
counter external headwinds and was confident of 15% growth in FY12.
Deepak Narnolia
+91 22 3029 5126
Deepak.Narnolia@MotilalOswal.com
L&T expects 15,000MW of orders, besides NTPC bulk orders, over the next few
quarters. It announced large orders such as the Hyderabad Metro (INR12b), four-
laning of NH14 between Beawar and Pindwara (INR17b), a 360MW plant order from
PPN (INR14b), EPC order from Zawtika Wellhead Platforms for PTTEP of Thailand
(INR10b), PPN's order to construct a power plant (INR35b), orders from ADNOC
(Abu Dhabi) and a UAE-based company (USD639m), driving order intake growth.
We expect the order book to grow to INR899b. Prospects are improving in sectors
like infrastructure, hydrocarbons and process segments. In the power sector, demand
outlook is strong in T&D and BoP spaces. However, uncertainty plagues sectors like
downstream hydrocarbon, defense and power equipment. The hydrocarbon division
is facing competitive pressure from new entrants. There is a project pipeline worth
USD15b from the Middle East, where L&T aims to bag orders worth USD3b-4b. It is
well placed (lowest bidder) in three orders (two in Abu Dhabi, one in Thailand),
aggregating INR35b, which will be booked this year.
Execution momentum to drive FY12 revenue growth of 25%
The management maintained its FY12 revenue growth guidance of 25% but is
cautiously optimistic and might review it after 2QFY12 results, given the uncertain
business environment. Our estimates factor in FY12 revenue growth of 23% and
25% for FY13. Margins are under pressure due to rising commodity prices. The
management stated that margins could be hit by 70-80bp due to headwinds from
commodity prices. Softer commodity prices can limit margin contraction.
Other takeaways
L&T is executing infrastructure projects aggregating INR627b with equity requirement
of INR125b. L&T aims to infuse USD300m-400m of equity in subsidiaries in FY12.
The management has guided USD300m of corporate capex while its working capital
requirement is likely to increase by USD100m-200m by the end of FY12.
Valuation and view
We expect L&T to post earnings CAGR of 25% over FY11-13.
Buy
with an SOTP-
based target price of INR2,127. We have valued L&T standalone at 20x FY13E earnings
and subsidiaries at INR484/share. We believe improved order intake visibility justifies
the target P/E of the standalone business.
August 2011
55

Sector:
Engineering
7th Annual Global Investor Conference
Suzlon Energy
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
SUEL IN
1777
39
1.5
66/34
-13/-4/-10
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/08A 136,794
3/09A 260,817
12,607
9,725
7.5
5.8
(8.2)
(2.3)
24.6
-22.9
na
na
5.2
6.8
na
na
0.7
0.7
0.9
1.2
21.7
11.7
-16.8
-4.8
15.3
12.8
1.3
0.0
0.6
0.7
0.9
0.9
4.3
6.3
26.6
14.7
3/10A 182,680 (12,738)
3/11A 159,941
(4,321)
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
Operating performance turns around; Suzlon on track to achieve guidance
Suzlon Energy's (SUEL) consolidated order book was USD6.6b, up 42% YoY (Suzlon
Wind USD2.5b, up 13% YoY; REpower USD4.1b, up 69% YoY). In terms of volumes
the order book was 4.7GW (Suzlon Wind, 2GW, REpower, 2.71GW). SUEL received
fresh orders of 160MW in August 2011.
Deepak Narnolia
+91 22 3029 5126
Deepak.Narnolia@MotilalOswal.com
The management expects consolidated sales of INR240b-260b (Suzlon Wind, INR14b-
16b; REpower INR9b-10b) and FY12 EBIT margins are expected to be 7% (v/s 8%
in 1QFY12). It also expects gross margins to improve to 30% from 22-23%, driven
by full realization of synergies from Repower operations by the end of FY13-14.
In Suzlon Wind over 60% (1.2GW, up 116% YoY) of the orders were from India,
which posted strong growth in 1QFY12. Out of total orders of 2GW in Suzlon Wind
1.4-1.5GW are to be delivered in FY12. In 1QFY12 SUEL delivered 437MW of turbines,
and therefore there is clear visibility of 1,800-1,900MW (437MW plus 1,400MW) in
FY12. SUEL expects to have FY12 sales of 23GW (out of this 1.8GW will be in India).
Emerging markets drive market outlook
The cost of wind power has fallen considerably in the recent past and now is almost
equal to other economical sources of energy. Regulatory changes, generation-based
incentives (GBI) and a rise in the cost of traditional sources of electricity have brought
the cost of wind energy to an economic and viable level.
In FY11 there was a record number of installations in China, dominated by domestic
players. However, recently China has removed compulsory local content requirement
and import duties which will benefit international players. The 12th Five Year Plan
targets 90GW of wind installations by 2015. Experts estimate that Indian market will
grow to 2-2.2GW in 2011 and 2.6-3GW 2012. Brazil, where half the installations are
supplied by SUEL, is expected to grow from 700MW to 6GW by 2019.
US markets are low due to low gas prices and the Canadian market is affected by
low PPA prices. However markets show improved prospects for 2011-12, compared
with the lows of 2010.
European markets are stable but more saturated and hence growing slowly. SUEL
sees growth potential in countries like Sweden, Poland and Romania. Other growing
markets include Germany, Belgium and Denmark.
Other takeaways
The management will increase stake in REpower to 100% by acquiring the remaining
5% stake for Euro63m. SUEL will also sell its 26% stake in Hansen, which will fetch
GBP150m (a 96% premium to the market price).
The company is expected recover INR10b from Edison (24% of debtors) in 2HFY12.
August 2011
56

Sector:
Engineering
7th Annual Global Investor Conference
VA Tech Wabag
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
VATW IN
11
404
0.1
723/367
-9/-11/-
YEAR
END
NET SALES EBIDTA
(INR M)
PAT
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV /
EBIDTA
MAR. (%) (INR M)
Mar-08
Mar-09
Mar-10
Mar-11
3,328
5,689
7,010
7,322
0.8
5.7
11.1
12.0
18
191
410
553
4.4
46.0
43.8
20.9
-74.1
942.6
-4.8
-52.2
-
-
-
22.8
-
-
-
3.1
1.0
10.6
18.7
16.9
5.0
16.3
34.1
27.2
-
-
-
15.6
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
Healthy order book provides revenue visibility; large pipeline in industrial space
VA Tech Wabag (VATW) has an order book of INR33.3b (73% domestic and 27%
international), with a BTB of 2.7x TTM revenue as at the end of 1QFY12. Key orders
include Chennai Desalination Project (INR7.4b), Water Treatment Plant and
Distribution System in Sri Lanka (INR3.6b), APGENCO of Kakatiya and Rayalaseema
BoP (INR2.9b) and IOPL Paradip Project for Total Water Management (INR2.5b).
Deepak Narnolia
+91 22 3029 5126
Deepak.Narnolia@MotilalOswal.com
The management sees healthy pipeline and very good level of inquires in the domestic
market, mainly in the industrial space, with the possibility of some very large orders
from private players in the medium term. The management mentioned that the
municipal sector is yet to see a pick up in orders. The international market is
experiencing a slowdown due to ongoing unrest in the MENA region. VATW has
framework orders (orders in the pipeline) of INR11.3b as of 30 June 2011, which
will be taken to firm order book once the LCs/advances are received.
Execution on track; revenue guidance for FY12 maintained
The management stated that execution is well on track. The largest project in hand,
the Chennai Desalination Project, is progressing satisfactorily and 56% of the EPC
project has been completed till now. The project is likely to be completed by the end
of 1QFY12.
Other key projects such as Sri Lanka project, APGENCO, Rayalaseema BoP, Water
Treatment Plant and Distribution System in Sri Lankla, and IOPL Paradip are also
making good progress.
Risk management remains priority; outsourcing model mitigating risk
High concentration to municipal clients (75% of order book) has escalated working
capital days. Keeping working capital low is critical in the business model. Also, top-
5 clients account for 60% of the order book, putting near-term growth at risk.
Almost 80% of the work in the value chain is outsourced to civil contractors and
electro-mechanical contractors. 30% of the work involves civil construction while
50% of the work is electro-mechanical in nature. Both of these jobs are outsourced.
The outsourcing business model mitigates the risk of non payment from customers.
Valuation and view
The stock has declined by nearly 30% since its listing in October 2010. VATW
disappointed in FY11, with revenue growing just 1%, though profit grew 36%. Though
near-term outlook appears uncertain, the company should be able to post strong
growth over 3-5 years.
The stock trades at 17x FY12E consensus EPS of INR72. We do not have a rating on
the stock. Growth in order inflows will be the key re-rating catalyst for the stock.
August 2011
57

Sector:
Engineering
7th Annual Global Investor Conference
Voltas
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
VOLT IN
331
116
0.8
263/109
-8/-21/-32
Key Takeaways
Environment challenging; increased project size in construction a positive
Despite concerns in the near term, the domestic MEP business is showing good
traction. The increasing size of construction projects in the domestic market
(especially in IT parks) is also boosting order inflows.
Voltas (VOLT) has a domestic order book of ~INR19.5b as at 1QFY12 end, however,
margins remain compressed because MEP projects now being finalized through
main contractors. Incremental orders are also witnessing margin pressure due to
increasing competitive intensity.
In the international space, competitive intensity is increasing resulting in pressure
on margins. The two large projects in Qatar (~INR15b in order book), are facing
margin pressure due to accelerated execution. The orders should be completed by
mid-FY13. VOLT expects long term EBIT margin of 7% for the international business.
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Deepak Narnolia
+91 22 3029 5126
Deepak.Narnolia@MotilalOswal.com
VOLT plans to bid for large projects in partnership with other strong players and the
company also entered into two new joint ventures (administrative partner to facilitate
local ordering process in the Middle East) in the Kingdom of Saudi Arabia and Oman,
and in the Far East which should help boost order intake in the region.
The management reiterated that RIE would break even in FY12. Most of the low/nil
margin legacy orders are complete and new orders have adequate margins.
EMP segment: Healthy growth in Textile Machinery; Mining & Equipment
constrained by regulatory environment
Management highlighted that many mills that had procured raw material at high
prices face a cash loss situation. VOLT has a healthy order book, but this needs to
be watched for changing business sentiment.
The mining and construction equipment business is challenged, as several client
companies are facing delays in obtaining environment and forest clearances.
Gains share in unitary cooling, though market getting increasingly fragmented
The market is increasingly getting fragmented, with the top 3 players accounting for
60% of the market v/s 65% a few months ago. However, VOLT gained market share
in recent quarters and has now number 2 position (after LG) in the domestic market.
According to management margin pressures are unavoidable in the segment. The
industry as a whole faces the problem of high inventory levels which could result in
higher discounting to liquidate unsold stock. VOLT expects its inventory to liquidate
by the end of December 2011.
Valuation and view
The stock trades at 12x FY12E consensus earnings. With 10-12% growth in core
earnings likely, VOLT 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.
August 2011
58

Sector:
FMCG
7th Annual Global Investor Conference
Bajaj Corp
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
BJCOR IN
148
112
0.4
152/73
1/20/-12
YEAR
END
NET SALES EBIDTA
(INR M)
PAT
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV /
EBIDTA
MAR. (%) (INR M)
Mar-09
Mar-10
Mar-11
2,444
2,946
3,587
21.1
33.1
24.9
470
839
841
18.8
5.5
5.4
-70.9
-1.4
-
-
21.6
-
-
4.6
166.1
211.0
47.0
187.5
263.4
59.1
-
-
16.5
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Key Takeaways
Volume momentum strong after price increases, conversion from other hair
oils drives growth
Harit Kapoor
+91 22 3029 5120
Harit.Kapoor@MotilalOswal.com
Bajaj Corp (BJCOR) posted 20% volume growth in 1QFY12 in its brand Bajaj Almond
Drops hair oil. Towards the end of the quarter, the company raised prices by ~8%.
Demand has thus far not been impacted and volume growth momentum has been
maintained in 2QFY12, as well.
Growth in Almond Drops is being driven by consumers converting from other hair
oils. The management indicated that with coconut oil players increasing prices by
~30% the gap between coconut oils and value added oils has fallen, facilitating
conversion.
BJCOR launched a cooling oil variant in the summer called Kailash Parbat Cooling
Oil. The management believes growth in hair oils will be a function of taking share
from players rather than expanding the market after 5-7 years.
Margins to recover from 2QFY12; Price increases, softer crude-related inputs
to help
In 1QFY12 BJCOR's margins declined by 1,000bp to 25.1% due to the full impact of
input costs increases and a lag in price increases.
The management expects that with the price increases and likely softening in LLP
prices (linked to crude, 35% of RM) margins are likely to gradually recover from
2QFY12.
Cautious international acquisition strategy
BJCOR has INR4b cash on its books, which it plans to use to expand its portfolio
through acquisition. Its balance sheet allows it to look at acquisitions worth INR8b-
9b.
The management indicated it would adopt a cautious approach while acquiring
companies and its first acquisition was likely to be small.
The promoter stake in the company is 85%, which will eventually have to be reduced
to 75% (per RBI regulations), which will be another fund-raising avenue, if need be.
Valuation and view
BJCOR is well placed in the value-added hair oil space with its brand being the
market leader in almond oils and posting strong growth. However, being a single
brand company poses risks to growth and profitability and BJCOR will need to
accelerate new product launches and build a diversified portfolio over the next few
years.
The stock trades at 21.6x FY11 EPS of INR5.4.
Not Rated.
August 2011
59

Sector:
FMCG
7th Annual Global Investor Conference
Dabur India
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
DABUR IN
1,741
107
4.1
122/87
8/22/15
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
SALES
EV/
EBITDA
03/10A 33,905
03/11A 40,774
03/12E 51,043
03/13E 57,961
5,032
5,686
6,532
7,806
2.9
3.3
3.8
4.5
27.6
13.3
15.0
19.5
-
32.7
28.4
23.8
-
13.4
11.7
9.3
53.5
40.9
41.5
39.3
55.5
30.2
44.0
43.8
-
4.6
3.6
3.1
-
25.1
20.3
17.3
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Key Takeaways
Volume growth under pressure; luxury and premium products doing well
Dabur India's volume growth has declined in the past few quarters, as consumers
are yet to adjust fully to higher prices and high food inflation.
Harit Kapoor
+91 22 3029 5120
Harit.Kapoor@MotilalOswal.com
Premium and luxury products are witnessing continued buoyancy in demand, as
necessities do not add up to a very significant part of the target audience's income.
Consequently, categories like processed foods, juices, air care and deodorants are
maintaining high growth rates.
Demand in the MENA region is slowly recovering; however, Levant countries will
take some time to recover.
Select inputs turning soft; margin recovery likely in 2HFY12
Input cost pressure is intense in materials like LLP, packaging, honey, spices, etc.
Oral care margins have been impacted, as Colgate has been very selective in price
increases, making price increases a difficult proposition for Dabur.
Categories like glucose and hajmola have also seen margin pressure.
Dabur has strong pricing power in amla and juices, which have seen price hikes in
the recent past. Softening input cost could enable margin improvement from 2HFY12.
Namaste integration on track; high visibility of growth
Dabur is very positive on the growth opportunity for Namaste in its niche segment of
ethnic products for people of African origin.
It is starting a new facility in Nigeria by 4Q and another facility in South Africa in
FY13 to have pan Africa presence.
The proportion of non-USA sales has increased from 21% to 30% in the last five
years; Dabur plans to significantly increase the proportion of non-USA sales to 60-
70% in the coming 5-7 years.
MENA region pressures exist; recovery likely from 3Q
MENA region has seen poor sales growth and margin pressure due to unrest.
Restrictions on pricing in Bahrain, Oman, etc continue to impact performance,
although these regions contribute just 5% of sales.
Libya, Syria and Yemen sales are under pressure and should recover from 3Q.
Valuation and view
We remain concerned on long-term sustainability in the shampoo business. Sales
growth and margins in amla oil could take a hit due to Marico's increasing aggression
in the value-added hair oil space.
We believe that increasing pressure in key domestic businesses like hair oils,
shampoos and oral care will result in Dabur becoming more dependent on
international acquisitions.
August 2011
The stock trades at 28.4x FY12E of INR3.8 and 23.8x FY13E EPS of INR4.5.
Neutral.
60

Sector:
FMCG
7th Annual Global Investor Conference
Emami
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
HMN IN
151
459
1.5
545/313
4/36/10
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/08A
03/09A
5,728
7,474
927
919
1,798
2,287
7.5
7.0
11.9
15.1
40.7
-6.3
69.8
27.2
-
-
-
30.4
-
-
-
10.1
35.8
31.1
38.8
34.8
31.2
23.7
28.9
28.3
-
-
-
5.6
-
-
-
27.5
03/10A 10,217
03/11A 12,535
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Key Takeaways
Revenue growth target 20%+ over the next few years; Fair and Handsome,
Zandu to drive growth
Harit Kapoor
+91 22 3029 5120
Harit.Kapoor@MotilalOswal.com
Over the past five years, Emami (HMN) posted 25% revenue CAGR through strong
volume growth, judicious pricing and acquisitions (Zandu). The management is
confident of achieving 20%+ organic revenue growth over the next few years.
Fair and Handsome and Zandu posted 67% and 27% growth respectively in 1QFY12.
The management expects the brands to be main growth drivers in FY12 led by
strong activation and category growth.
Input cost pressures persist; Price hikes, cost savings to keep margins at
FY11 levels
Menthol prices (25% of RM) doubled over the past one year and rule firm and LLP
prices are up 40% YoY. HMN raised prices by 4% and plans another price increase
towards the end of 2QFY12.
Although gross margins are likely to be lower in FY12 with savings on A&P spends
(17-18% expected in FY12 v/s 19.5% in FY11) and operating leverage, the
management expects to maintain EBITDA margins at FY11 levels.
Bangladesh facility to become operational by 3QFY12, Egypt on hold, exports
do well
Exports increased 31% in 1QFY12 and the management is focused on increasing
distribution in focus markets of SAARC, Africa and the Middle East.
HMN's Bangladesh facility will become operational by 3QFY12. Egypt plans are on
hold and will be reviewed in a couple of quarters.
Emami open to domestic acquisitions, to consider opportunities when they
arise
Although international acquisition opportunities are many, HMN is keener on domestic
opportunities. There has been no activity regarding Paras Pharma's personal-care
brands and the management maintains it will evaluate the opportunity if it arises.
Valuation and view
HMN continues to grow ahead of its peers through niche positioning and leadership
in key categories. Margin pressure and acquisition intent in the domestic market will
be key factors to watch for in the near term.
The stock trades at 30.4x FY11 EPS of INR15.1.
Not Rated.
August 2011
61

Sector:
FMCG
7th Annual Global Investor Conference
Hindustan Unilever
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
HUVR IN
2,161
313
14.8
347/262
7/23/28
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/10A
03/11A
03/12E
03/13E
177,253
197,352
223,260
249,445
21,027
21,485
24,139
27,317
9.6
9.9
11.2
12.6
-16.0
3.2
12.4
13.2
-
31.5
28.0
24.8
-
25.7
21.5
18.1
81.4
81.6
76.6
73.1
105.1
103.5
99.4
95.6
-
3.3
2.9
2.6
-
24.0
20.7
18.0
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Key Takeaways
Proportion of realization in sales growth increasing
The FMCG sector is maintaining double-digit sales growth, though the proportion of
realization in overall sales is increasing.
Harit Kapoor
+91 22 3029 5120
Harit.Kapoor@MotilalOswal.com
According to AC Nielsen, Urban India is growing at a faster rate than Rural India.
However, Hindustan Unilever (HUVR) has indicated that Rural India is growing faster.
Competitive intensity remains high; sharp margin expansion unlikely
Competitive intensity in categories like laundry and shampoos remains high; lower
ad spend does not indicate decline in competitive intensity in the market. Rin continues
to gain share in a category where HUVR competes with players like P&G and Ghari.
Cost of inputs like PFAD, LAB, packaging, etc has risen sharply. HUL is following a
strategy of balancing volume growth and profitability by undertaking calibrated price
increases. However, price increases are insufficient to cover the input cost inflation.
India offers huge growth opportunity but the competition is likely to remain intense.
HUVR is looking at competitive growth. Margins are low and are unlikely to increase.
Uniquely placed to capture growth across segments
HUVR is uniquely placed to capture the growth opportunity across income classes,
as it has brands across price points and segments.
The company is launching new products for emerging consumers. It is focusing on
categories like hair conditioners, fabric conditioners, deodorants, and food products
like Knorr Soupy Noodles, Kissan Creamy Spread and Kissan Soy Juice.
HUVR is creating channels of tomorrow, with strong alignment of products and
services catering to the requirements of modern trade and is also expanding
distribution in Rural India. It has added 0.5m direct retail points in FY11 and aims to
increase the distribution gap with competitors.
Valuation and view
We expect gross margin to expand in the coming quarters, led by (1) 22% decline
in PFAD prices from the peak, (2) calibrated increase in detergent prices (10-17%)
and toilet soap prices (5-11%) over the past six months, and (3) above teens volume
growth in the personal care category.
We expect volume growth to soften, led by (1) the impact of high price increases in
soaps and detergents in the current inflationary environment, and (2) a high base
effect, as FY11 volume grew 16% for detergents and 8% for toilet soaps (much
above long-term industry growth). We estimate 13% PAT CAGR over FY11-13.
The stock trades at 28x FY12E EPS of INR11.2 and 24.8x FY13E EPS of INR12.6.
Neutral.
August 2011
62

Sector:
FMCG
7th Annual Global Investor Conference
ITC
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
ITC IN
7,738
202
34.3
211/149
10/41/37
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/10A 183,924
03/11A 214,683
03/12E 253,817
03/13E 292,361
40,610
49,876
61,461
72,392
5.1
6.5
7.8
9.2
24.4
22.8
23.2
17.8
-
31.2
25.9
22.0
-
9.8
8.3
7.1
27.8
33.2
34.8
34.8
38.5
42.9
46.2
46.6
-
7.0
5.9
5.1
-
19.9
16.2
13.6
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Key Takeaways
Cigarettes: Volume growth strong; margin expansion to be gradual
Cigarette volume growth remains strong, although the low base effect will not be a
big factor in the coming quarters as it was in 1QFY12.
Post the recent increase in VAT in Tamil Nadu (from 12.5% to 20%), ITC's average
VAT rate is ~16.5%. Recent price increases will enable the company to absorb the
impact of the excise hike.
ITC operates at 55%+ EBIT margin in cigarettes, the highest in the industry.
Incremental margin expansion over the next 2-3 years will be a function of improved
product mix and will be moderate.
Harit Kapoor
+91 22 3029 5120
Harit.Kapoor@MotilalOswal.com
FMCG: Improving profitability in biscuits; new launches driving growth
FMCG losses declined 15% in 1QFY12 and continue to trend lower; the key driver
for this decline has been the foods division, which has now broken even for the last
six quarters.
The two major new launches of FY11,
Sunfeast Yippee
noodles and
Vivel Activ Fair
skin cream, have performed well.
Yippee
in particular has performed well above
expectations, with demand outstripping current capacity.
In personal care, the volume share of soaps has exceeded 6%; ITC is targeting
double-digit market share in soaps in 2-3 years. In shampoos,
Fiama Di Wills Anti
Hair Fall
has been well accepted.
Hotels: Gradual recovery; to invest INR15b over three years
In hotels, the company expects low to mid single-digit occupancy growth; ARR
growth will play out after the next few quarters, as room additions in the industry
are likely to slow down. Over the next three years, ITC plans to invest INR15b in the
hotels business. It will commission its 600-room Chennai property by 4QFY12.
Agri and Paper
Agri division sales are likely to grow in high single digits, as leaf tobacco prices are
stable. Demand for Indian leaf tobacco is unlikely to increase due to higher production
in Brazil and Africa.
ITC's new 0.1m ton paperboard unit will aid growth in FY13; FY12 growth will be
driven by mix improvement and higher realizations.
Valuation and view
The company plans to invest INR15b across businesses in FY12.
ITC continues to be our top pick in our FMCG coverage universe due to strong
pricing power and higher growth potential in the cigarettes business, declining losses
in FMCG, and likely uptick in the hotels business.
The stock trades at 25.9x FY12E EPS of INR7.8 and 22x FY13E EPS of INR9.2.
Buy.
63
August 2011

Sector:
FMCG
7th Annual Global Investor Conference
Marico
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
MRCO IN
615
157
2.1
173/112
10/37/34
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/10A 26,608
03/11A 31,283
03/12E 39,510
03/13E 45,917
2,454
2,918
3,272
3,936
4.0
4.7
5.3
6.4
19.3
18.9
12.2
20.3
-
33.0
29.4
24.5
-
10.5
8.6
6.6
36.9
31.9
29.3
27.0
40.8
29.7
33.8
35.6
-
3.2
2.5
2.1
-
24.7
19.9
16.4
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Key Takeaways
Parachute volume growth intact; hair oils displaying strong momentum
Volumes grew 15% YoY in 1QFY12, backed by 10% growth in
Parachute,
32% in
hair oils, and 15% in
Saffola.
Harit Kapoor
+91 22 3029 5120
Harit.Kapoor@MotilalOswal.com
Parachute Coconut Oil volume growth came as a positive surprise, given 32% price
increase. Value-added hair oil volumes have increased 32%, led by
Parachute
Advanced, Shanti Amla
and the introduction of new launches like cooling oil and
ayurvedic oil in new markets.
Intent to reduce dependence on copra; aggressive pricing of amla oil to sustain
MRCO wants to reduce dependence on copra in the long term by increasing the
share of value-added hair oils. Its market share in the amla oil segment has increased
from 7% to 15% while it has garnered 9-10% share in cooling oil in South India.
MRCO plans to maintain aggressive pricing in
Shanti Amla
and expand its franchise,
as it is aiming at gross margin of 45% and EBITDA margin of 12-15% in this segment.
Kaya being transformed
Kaya Skin Care operates 105 clinics; like-to-like sales are increasing in mid teens.
Kaya's business model has seen a transformation, with focus on increasing the
frequency of consumer visits and projecting it as a destination for beauty solutions
rather than dermatology solutions.
Saffola being extended to other wellness categories
MRCO is extending
Saffola
from oils to other food product categories to capture
various food consumption options during the day. It has launched
Arise
again and
has launched a basmati variant of
Arise.
Oats have received encouraging response
and MRCO has launched a new flavor in oats.
International business: Looking at leveraging cross-selling opportunities
MRCO is looking at leveraging cross-selling opportunities across segments. It has
launched
Haircode
hair dye in Bangladesh, which has garnered 30% market share.
Middle East and Egypt business remains under pressure due to pricing restrictions
and unrest in countries like Libya, Syria and Egypt. Recovery will be gradual and
near-term pressures are likely.
Valuation and view
Near-term margin pressures are likely to sustain due to high input costs and
aggressive pricing-led growth strategy in hair oils.
International business excluding Bangladesh will remain under pressure due to unrest
and pricing restrictions in the Middle East and Egypt.
The stock trades at 29.4x FY12E EPS of INR5.3 and 24.5x FY13E EPS of INR6.4.
Neutral.
64
August 2011

Sector:
FMCG
7th Annual Global Investor Conference
Pidilite Industries
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
PIDI IN
506
161
1.8
183/123
4/24/26
YEAR
END
NET SALES ADJ. PAT
(INR M)
(INR M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(INR) GROWTH (%)
SALES EBITDA
3/10A
3/11A
3/12E
3/13E
19,533
23,806
28,903
34,644
3,028
3,297
3,762
4,749
6.0
6.5
7.4
9.1
86.4
8.9
14.1
22.3
-
24.7
21.7
17.7
-
7.1
5.8
4.4
32.3
28.9
27.1
25.3
26.2
30.7
29.5
31.9
-
3.3
2.7
2.2
-
16.5
14.3
11.1
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Key Takeaways
Consumer, bazaar demand strong, industrial segment demand slows
In spite of a 5-7% price increase in the consumer and bazaar segments, demand in
this segment has been strong with no major change. The segment posted 16-17%
Harit Kapoor
+91 22 3029 5120
Harit.Kapoor@MotilalOswal.com
volume growth in 1QFY12
In the industrial segment, demand was slower due to a steeper price hike of 8-9%
and a slowdown in user industries.
The management expects consumer and bazaar products growth to be healthy
though industrial growth may slow in the near term.
Input cost pressure
VAM (vinyl acetate monomer) prices increased 40% over the past few months and
packing costs were steady. However recent trends indicate that VAM prices softened
to USD1,300/ton from USD1,400/ton (USD1,000/ton in December 2010).
The management indicated that if input costs corrected significantly, PIDI would
correct prices as its brands are at a 15-20% premium to competition.
Elastomer project
The elastomer project is on schedule with expected commissioning in 2HFY13. Total
capex has been INR3.3b with another INR2.2b-2.5b to be incurred in the next one
year.
Current product prices are trading at USD5/kg. At USD4.5/kg and full capacity
utilization, PIDI expects INR5b of sales a year with EBITDA margins of over 20%.
All international businesses improve except South America
PIDI's International business was under pressure in FY11. In FY12 PIDI's operations
are expected to be profitable in the US, Bangladesh and Thailand. The company's
losses are reducing in Egypt and Dubai but in Brazil operations are face strong
competition.
PIDI is not considering international acquisitions and will look at developing Africa
and the Middle East as markets, organically.
Valuation and view
We believe PIDI has strong pricing power in consumer products and margins will
rebound in coming quarters as the impact of price increases sinks in. We believe
PIDI is a compelling play on the expected growth opportunity in home interiors and
construction.
The stock trades at 21.7xFY12E EPS of INR7.4 and 17.7xFY13E EPS of INR9.1. Maintain
Buy.
August 2011
65

Sector:
FMCG
7th Annual Global Investor Conference
Radico Khaitan
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
RDCK IN
133
129
0.4
186/121
11/5/6
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/08A
03/09A
03/10A
03/11A
8,099
7,083
8,383
9,965
439
172
418
728
4.3
1.7
3.2
5.5
26.7
-60.8
88.6
73.6
-
-
-
23.5
-
-
-
2.6
17.8
7.1
10.1
12.5
8.6
6.9
10.2
11.1
-
-
-
2.1
-
-
-
13.4
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Key Takeaways
Mid-teens volume growth target, focus on profitability over next few years
Radico Khaitan's (RDCK) IMFL aims at volume growth of 13-15% over the next few
years, led by higher growth rates in its high contribution brands. Its mainline brands
Harit Kapoor
+91 22 3029 5120
Harit.Kapoor@MotilalOswal.com
constitute 73% of IMFL volumes compared with less than 60% in FY09.
RDCK is focused on improving profitability. Brands like Magic Moments, Morpheus
Brandy and After Dark whisky have 4-8x contribution margins compared with 8PM
and RDCK believes margins can be significantly enhanced with thrust on these brands.
Molasses prices rule firm; Price increases to aid margin expansion
Contrary to expectations, molasses prices have not come off due to increased spirit
demand for ethanol blending. However, glass bottle prices increased 18%.
Price increases of 3-3.5% were taken so far in FY12. RDCK believes they are sufficient
to pass on input cost pressure. Further price increases are awaited in Andhra Pradesh
and Karnataka. The management expects 100bp expansion in FY12.
Magic Moments, new launches to drive growth in the premium segment
In 1QFY12, RDCK's IMFL division's volume grew 12.3%. Magic Moments continues
to drive growth, increasing volumes 21% with 8PM whisky growing 17% by volume.
RDCK is banking on new launches Morpheus Brandy and After Dark to drive
incremental growth. Morpheus is expected to sell 300,000 cases in FY12
(up 35-40%).
After Dark is at an initial stage. The company plans to launch a national campaign
around Diwali to promote the product. It is more than satisfied with its performance
thus far and will only share growth outlook for this brand in the forthcoming year.
Debt in check, FCCB replaced by low cost ECB
RDCK maintained its debt since its QIP last year. Net debt was INR4.3b as of June
2011. RDCK plans to fund its capex of INR400m-500m through internal accruals.
It also redeemed its FCCB by paying USD44.22m and replacing it with a seven-year
tenure ECB with interest rate of ~5%.
Valuation and view
RDCK is a pure play on India's IMFL consumption story. RDCK's strategy to move up
the value chain in terms of premium brands and greater profitability will be a function
of the success of new launches such as Morpheus Brandy and After Dark Whisky.
Being in a position in fund its own growth and not increase debt significantly over
next few years will be a big positive if it can execute this strategy as IMFL players in
India have been constantly looking for external sources of funding to do so.
August 2011
The stock trades at 23.5x FY11 EPS of INR5.5.
Not Rated.
66

Sector:
Information Technology
7th Annual Global Investor Conference
Financial Technologies India
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
FTECH IN
46
716
0.7
1453/657
-1/-2/-38
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/08A
3/09A
3/10A
3/11A
1,376
3,564
3,330
3,577
9,612
3,686
3,444
925
208.1
80.3
75.0
20.1
913.1
-61.4
-6.7
-73.1
-
-
-
35.6
-
-
-
1.6
115.2
23.2
18.3
4.5
3.4
8.8
7.0
6.1
-
-
-
10.0
-
-
-
21.9
Covering Analyst(s):
Ashish Chopra
+91 22 3982 5424
Ashish.Chopra@MotilalOswal.com
Key Takeaways
Case of MCX-SX transaction fees cleared
MCX-SX (owned by Financial Technologies (FTECH)) started levying transaction
charges in its currency derivatives segment from August 2011. Before this, the
company was compelled to offer free transaction services in NSE's zero-pricing
regime.
MCX-SX posted losses of ~INR1.5m a day due to the non-levy of transaction charges.
This is now set to change after CCI found the NSE guilty of abusing its market
dominance and asked it to stop unfair trade practices like subsidizing services.
MCX-SX will charge up to INR1.10 per INR100,000 of average daily traded value.
MCX going strong, IPO could unlock value
Stake sale in MCX's last two transactions valued the exchange at ~USD1b, the last
of which took place in February 2008. The exchange has had sustained high volume
and profit growth, and should be able to list at a significantly higher valuation.
August trading volumes averaged over INR693b a day against INR479b a day in July
and INR403b in June. At this rate, the company expects higher PAT than it estimated.
New exchanges see up-tick in valuations
The Singapore Mercantile Exchange's trading volume and turnover surged over the
past few weeks, hitting a historic high with INR16b worth of contracts traded in a
day only a few days ago. SMX, which went live on 31 August 2010, saw its membership
double over the past 11 months, crossing 50.
Unlike in India, where brawls with regulatory authorities and competitors hamper
progress on exchange ambitions, the company operates in a friendlier environment
outside India as far as regulations are concerned. The company's increasing volumes
bode well for FTECH's profitability, which is 100% owner of the exchanges.
Negatives fully priced in, incrementally positive news can boost stock price
FTECH's liquid cash and its proportionate share in MCX (assuming USD1.2b valuation
for MCX) adds up to INR29.4b and the company's market cap is INR34b. This excludes
FTECH's ventures in the financial ecosystem, including its technology business, foreign
exchanges and contingent valuation on MCX-SX.
Negative news flow on MCX-SX, delay in MCX's IPO and depressed volumes in new
exchanges hurt valuations. Increasing volumes on the MCX and transaction charges
in currency derivatives trading appear to be initial signs of a turnaround, and more
incrementally positive news could trigger a surge in the stock price.
August 2011
67

Sector:
Information Technology
7th Annual Global Investor Conference
Info Edge India
Covering Analyst(s):
Ashish Chopra
+91 22 3982 5424
Ashish.Chopra@MotilalOswal.com
Key Takeaways
Scalability in unique user additions not an issue, Info Edge sees no competition
affecting it yet
Info Edge (INFOE) does not see a problem in scaling up its number of unique
customers, which totaled over 42,000 in FY11. A healthy growth environment will
see organizations scale up, which should facilitate the additions of new customers.
LinkedIn has established an active sales team in India, and INFOE will watch the
space for effects on its Naukri business. The company does not anticipate a significant
impact from this as they operate in different segments. LinkedIn offers a passive
environment vis-à-vis the active job-seeking environment at Naukri.com. However,
the fact remains that it would be able to tap resources, especially at the senior
level, which would be out of Naukri's reach.
Positive on getting price increases despite being the price-master
INFOE does not see a problem in attaining a 5-7% pricing increase in its Naukri
solutions. While the company has a wide array of pricing, based on a mix of services
on a like-to-like basis, Naukri would command a higher price than peers.
Naukri's virtuous cycle of self-sustenance also plays a part in facilitating this,
compounded by the fact that talent will be in hot demand if the growth story holds
out, directly benefiting its business.
Seeing a dip in IT hiring, vo lume dip in real estate could hurt 99acres
INFOE cited a decline in IT hiring trend in the past month, going by hiring data at
Naukri. However, this is not alarming because Naukri caters largely to lateral additions
in the IT space. Compared with freshers, lateral additions are seasonally high in the
AMJ quarter, before freshers start joining in large numbers.
99acres.com, INFOE's other portal, has been on a high growth trajectory, albeit on
a lower base. However, rising interest rates and relatively firm realty prices, especially
in regions like Noida, may impact volumes, which are expected to have a direct
bearing on the portal's performance.
Spending on ad vertising to pick up to increase visibility across new ventures
INFOE has had a reactionary stance in advertising spends in its fiercely contested
spaces, Naukri, Jeevansaathi and 99acres. However, the advertisement spends are
likely to be higher given that INFOE announced a promotion roll out for Shiksha.com
and will also need to increase visibility in some of its acquired ventures.
We would prefer INFOE to take a more proactive stance towards these spends and
try to aggressively win traffic share, especially given several new online ventures,
such as Zomato.com, Shiksha.com, Brijj.com and Meritnation.com, are still in the
early phase of development,.
Fundamentals strong, valuations look rich
While fundamentals are strong, current valuations do not provide a margin of safety.
INFOE has high sensitivity to macroeconomic outlook, which is mired in uncertainty.
We expect INFOE to post revenue CAGR of 25.3% and EPS CAGR of 23.7% over
FY11-13.
Not Rated.
August 2011
68

Sector:
Information Technology
7th Annual Global Investor Conference
Infosys
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
INFO IN
574
2,194
27.5
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A
3/11A
3/12E
3/13E
227,420
275,010
327,353
385,097
61,340 107.4
68,230
119.4
77,330 136.7
90,719 158.8
4.7
11.2
14.4
16.2
-
18.4
16.1
14.0
-
4.8
4.0
3.4
29.7
27.8
27.1
26.4
33.7
33.1
31.8
31.3
-
4.0
3.2
2.7
-
12.5
10.5
8.7
52-Wk Range (INR) 3,494/2,172
1, 6, 12 Rel Perf (%) -10/-20/-9
Covering Analyst(s):
Ashish Chopra
+91 22 3982 5424
Ashish.Chopra@MotilalOswal.com
Key Takeaways
Europe key to macro-economy, businesses, Infosys better prepared this time
While there have been no revisions to budgets so far, the possibility of revisions
cannot be ruled out in the near term. The situation in Europe will be the key
determinant of which way the macro-economy is headed, since a default in sovereign
debt would impact the financial sector and spread to other sectors. Compared with
2008, businesses are better prepared this time to respond to the situation of a
global meltdown; having braced themselves for a slow and gradual recovery.
Infosys (INFO) is confident of managing the tough times given: (1) a more diversified
portfolio of revenues, (2) better competitive positioning and (3) complete focus on
clients hereon, with the restructuring exercise behind it.
Governments' stomach for concerted action, US unemployment key worries
The key worry this time is the stomach of central banks for concerted action like
multiple rounds of Quantitative Easing, seen the last time.
The visa rhetoric has been an irritant in the recent past it may not be fully behind
the industry. As long as unemployment in the US is high, it is anybody's guess what
measures might be adopted to tackle it.
To manage efficiency, margins in absence of outperformance to guidance
INFO's had to give up some growth given high utilization rates (about 82%) in FY11,
after initially guiding at 25,000 gross hires. Consequently, INFO planned and guided
for 45,000 gross hires in FY12, keeping slack for growth above the guided 20%. But,
it may go slow on lateral hires as growth is unlikely to exceed guidance.
INFO will attempt to up the utilization rate (excluding trainees) to 78-82% targeted
band (up from 75% currently). As far as onsite is concerned, INFO will try and
ensure greater business from the consulting/SI engagement and hire more locals in
that segment, since utilization in consulting/SI is about 70%.
Margins to be in a band, Infosys to continue to command premium pricing
INFO is confident it will maintain margins within a narrow band at which it operated
over the past few years, as and when it exercises levers like increased offshoring,
improvement in revenue productivity and higher proportion of non-linear revenue.
INFO will continue to exercise pricing discipline and command a pricing premium
over its peers. The company has seen its revenue productivity improve over the
past four quarters, driven by like-to-like pricing increases and improved productivity.
Valuation and view
A slowdown in 4QCY11 deal signings will put FY13 estimates at risk. Notwithstanding
near-term stress we believe a slowdown will hit the industry only briefly, and it will
rebound as headwinds clear. Maintain
Buy,
with a target price of INR3,176 based on
20x FY13E EPS.
August 2011
69

Sector:
Information Technology
7th Annual Global Investor Conference
TCS
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
TCS IN
1,957
918
39.3
1,247/832
-6/-9/17
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(INR) GROWTH (%)
SALES EBITDA
3/10A 300,289
3/11A 373,245
3/12E
3/13E
68,647
86,826
35.1
44.4
53.0
64.0
33.6
26.5
19.5
20.8
-
20.7
17.3
14.3
-
7.1
5.2
3.9
37.3
37.4
34.6
31.3
40.9
42.2
39.8
35.8
-
4.7
3.6
2.9
-
15.6
12.4
10.0
467,277 103,723
549,336 125,346
Covering Analyst(s):
Ashish Chopra
+91 22 3982 5424
Ashish.Chopra@MotilalOswal.com
Key Takeaways
Demand environment intact, no change in hiring plans
The demand environment has not changed materially after the heated noise about
the economic turmoil in recent weeks. However, mega deals have not been on the
table, which has been the case for some time.
TCS has not changed hiring plans yet, especially since there have not been project
cancellations/deal deferrals/budget cuts till date.
For TCS the pipeline has not contracted yet, and continues to be broad-based. It
remains to be seen whether the pipeline is more of vendor consolidation work or
new projects. TCS maintained its guidance for consistent growth through FY12.
No incremental pressure from pricing or supply side
There has been no pricing pressure, and the management views the conditions as
being pretty much the same as they were five months ago. However, it expressed
caution on price contamination, if peers adopt an aggressive approach. However,
there has been no change given that the fears have lasted for a couple of years.
Attrition has been normal and has not moved significantly in either direction. Contrary
to some articles on a slowdown in IT hiring, TCS sees no declining trend in hiring.
Need for caution over US unemployment
High unemployment in the US is a cause for concern. Given that clients are aware
about the situation, cut-downs in numbers may not drive additional offshore spends
amid the ongoing protectionist rhetoric.
However, the visa issue is more political than economical. This should change going
forward with the company's and the industry's sharper focus on hiring locals.
Target to sustain margins, local hiring at onsite not expected to hurt margins
TCS maintains its target of 27% EBIT margin and expects to steadily work towards
that level, despite headwinds from (1) promotion impact effective from 2QFY12,
and (2) continued investment in people and infrastructure.
TCS does not believe increased local hiring will impact margins, mainly due to a low
base of onsite employees. The salary differential at a junior level between recruits
from India and local hires would be insignificant.
Valuation and view
Our estimates for FY12 and FY13 EPS stand at INR53 and INR64 respectively. TCS
has been on a purple patch but its valuations had built in continued exemplary
outperformance. However, the recent correction provides the necessary margin of
safety, which we believe, makes the risk-reward favorable.
August 2011
70

Sector:
Information Technology
7th Annual Global Investor Conference
Wipro
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
WPRO IN
2,456
333
17.9
500/310
-5/-14/-8
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A 271,957
3/11A 310,542
3/12E
3/13E
354,840
410,119
45,935
52,794
56,933
67,248
18.8
21.6
23.2
27.4
18.2
15.1
7.5
18.1
-
14.8
13.8
11.7
-
3.4
2.7
2.2
26.8
24.2
21.5
21.0
21.9
20.0
18.5
18.7
-
2.4
1.9
1.6
-
11.5
9.7
7.7
Covering Analyst(s):
Ashish Chopra
+91 22 3982 5424
Ashish.Chopra@MotilalOswal.com
Key Takeaways
Restructuring on track, efforts to translate into growth in a couple of quarters
The restructuring exercise is largely behind Wipro (WPRO) and the management
stated that indicators of the new strategy bearing fruit were present.
WPRO is confident some of the recent wins will start showing in revenue growth in
a couple of quarters' time, facilitating stated objective to match/beat peer growth.
Budgets intact thus far, industry maybe hit with a lag, mayhem of 2008 unlikely
It has been only weeks since the turmoil has picked up in magnitude, after the S&P
downgrade of the US; and hence, too early for clients to react with budget cuts.
However, WPRO does not expect large customers to be fighting for survival this
time, unlike in 2008. But any slowdown will be after a lag as, even after the Lehman
collapse, it took clients nearly two months to announce significant volume cuts.
Margins to be hit in the near term, target of maintaining current levels
While WPRO aims to manage its margins within a narrow band (22.1% EBIT margin
in IT Services in 1QFY12), headwinds are expected to pull down margins in the near
term because: (1) Two months of wage inflation impact in 2Q; (2) Continued
investment in growth as it aligns its sales force to focus verticals; (3) 2QFY12 will
witness the full quarter impact from SAIC, which are at much lower profitability.
WPRO expects to limit the impact of lower margins through the following levers: (1)
revenue productivity, (2) employee pyramid management, (3) cost cuts on sub-
contracted employees and (4) increase in proportion of non-linear revenue.
Attrition scenario not alarming, re-org driven exits largely behind WPRO
WPRO has witnessed higher attrition than peers and the exits in the top cadre after
the organizational re-jig were in line with its expectations. WPRO believes key
personnel are in place and the exits are largely behind it and expects attrition to
decline going forward despite the wage hikes.
WPRO brings freshers onboard through three threads of hiring: (1) Visiting key
campuses; (2) Non-engineers, who go through a four-year work-cum-study program
and end up with a Masters degree, hence have high retention rate; (3) Off-campus
hires, which happen during the mid to second half of a calendar year.
Valuation and view
Performance on customer additions and client mining lends increasing confidence
that WPRO's FY13 revenue growth should match that peers like TCS (FY13 USD
revenue growth of 19.1%) and Infosys (FY13 USD revenue growth of 19.2%).
Our EPS estimates are INR23.2 for FY12 and INR27.4 for FY13. Maintain
Buy
with a
target price of INR466 based on 17x FY13E earnings.
August 2011
71

Sector:
Infrastructure
7th Annual Global Investor Conference
Ashoka Buildcon
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, Rel Perf (%)
ASBL IN
53
265
0.3
362 / 226
9/4/-
YEAR
END
NET SALES EBITDA
(INR M)
MAR. (%)
PAT
(INR M)
EPS
(INR)
EPS
GR.(%)
P/E
(X)
ROE
(%)
ROCE
(%)
EV/
EBITDA
03/08A
03/09A
03/10A
03/11A
3,264
7,423
11,163
11,948
13.5
16.3
13.3
13.6
221
478
757
847
4.8
10.5
16.6
16.1
-81.6
116.6
58.4
-2.8
-
-
-
16.1
8.3
16.2
21.3
15.7
8.8
16.3
19.2
17.2
-
-
-
9.3
Consolidated
Covering Analyst(s):
Nalin Bhatt
+91 22 3982 5429
NalinBhatt@MotilalOswal.com
Key Takeaways
ASBL EPC business revenue to grow 30-35%
The Ashoka Buildcon (ASBL) management expects EPC revenue to grow 30-35% in
FY12, driven by a robust order book of INR43b. On the toll revenue front it expects
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
revenue of INR3.5b against INR1.9b in FY11.
ASBL's YTDFY12 order book is INR43b, including 94% from the roads and 6% from
the power segments. In FY12 it aims at order intake of INR25b-30b.
Strong traction expected in FY12 toll business, opportunity looks promising
On the bidding front, on a standalone basis ASBL qualified for projects worth about
INR20b as on 31 March 2011.
Out of 24 projects, it is collecting toll on 18 and expects to start toll on two more
projects (Durg and Dhankuni) in FY12.
NHAI plans to award 7,300km of roads over FY11-12, which will offer significant
growth opportunities to established players like ASBL.
A portfolio of 18 operational projects covering ~3,000 lane kms with average traffic
growth of 5-7% will ensure steady revenue growth.
The management said that in most cases, traffic growth was in line with its
expectations, except for the Bhandara project, where traffic was 10-12% less than
estimated.
Progress on projects under construction
Construction work on the Durg and Jaora-Nayagaon projects has been substantially
completed. Toll collection is expected to start for the Durg project in 3QFY12. For
the Jaora-Nayagaon project, toll collection has begun on two of three sections. Toll
collection on the third section will start in 3QFY12.
Other projects under construction are Sambalpur-Baragarh and Belgaum-Dharwad.
ASBL has started mobilization on the Sambalpur-Baragarh project, and construction
activity has begun on the Belgaum-Dharwad road.
Equity requirement of INR9b over the next 2-3 years
The management said it would meet the fund requirement of INR9b through internal
accruals and from the toll projects.
Valuation and view
The stock trades at a PER of 11x and 9x on FY12E and FY13E basis (Bloomberg
consensus).
Not Rated.
August 2011
72

Sector:
Infrastructure
7th Annual Global Investor Conference
Dedicated Freight Corridor
Covering Analyst(s):
Nalin Bhatt
+91 22 3982 5429
NalinBhatt@MotilalOswal.com
Key Takeaways
Move to tackle growing cargo traffic through a dedicated route
Dedicated Freight Corridor Corp (DFCC), a special purpose vehicle, was set up to
plan and develop, construct, maintain and operate a dedicated freight corridor for
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
transport of cargo, to save time and cost.
The golden quadrilateral, connecting India's four major metro cities is saturated,
operating at 110-150% of capacity. Growth in demand for coal in the power sector
and rapid industrialization calls for dedicated freight transport facilities. A feasibility
study was carried out by RITES, which found a dedicated freight corridor
remunerative.
Eastern/western corridor work initiated, to be operational in December 2016
DFCC initiated work on two corridors, approved by railway ministry. Work on the
eastern corridor (from Dankuni in West Bengal to Ludhiana in Punjab) and the
western corridor (from JNPT to Dadri) has commenced or is in the process of being
awarded.
DFCC plans to commission a 66km double-line track in the Mughalsarai-Sonnagar
section, (cost INR8.5b) by December 2014 on the eastern corridor.
It plans to finalize project awards for the stretch on both corridors by mid-FY13, to
achieve the stated timeline of project completion by December 2016.
The government of Japan will provide a special economic partnership loan of 679b
yen to finance construction of the western corridor and procurement of locomotives.
The loan will be extended on soft terms for 40 years with a moratorium of 10 years.
The remaining cost will be borne by the Ministry of Railways in the form of equity to
DFCC. The first tranche of the loan for 90b yen for construction between Rewari
and Vadodara has been signed. Another 274b yen funding for Phase II (Vadodara-
JNPT) is under negotiation and expected to be finalized by March 2012.
For the eastern corridor, the section from Ludhiana to Mughalsarai will be funded by
a USD2.7b World Bank loan and the section from Mughalsarai to Sonnagar will be
funded by the government of India. Sonnagar to Dankuni will be on a public-private-
partnership basis.
Project cost INR780b, packages to include civil/electrical contracts
DFCC's project cost had been originally envisaged at INR280b, as estimated by
RITES in 2006. This has gone up due to: (1) a change in alignment at few junctions,
(2) increase in commodity prices, execution timelines and (3) increase in interest
during construction (IDC, INR100b+) and thus, project cost has been revised to
INR780b.
Of this however, IDC is a soft cost (payable with debt, only once the project is
operational). Therefore, the funding is required for ~INR650b+.
DFCC indicated that the packages could be broadly divided into the length for both
the corridors and the scope of civil work would be ~60% (including laying tracks),
and signaling/electrical works will be ~30%. The rest is IDC ~10%.
August 2011
73

Sector:
Infrastructure
7th Annual Global Investor Conference
NCC
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
NJCC IN
257
57
0.3
172/52
-16/-33/-54
YEAR
END
NET SALES*
(INR M)
PAT*
(INR M)
EPS*
(INR)
EPS*
GR. (%)
ADJ P/E*
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A
3/11A
3/12E
3/13E
57,120
62,299
67,821
74,382
2,861
2,218
1,907
11.1
8.6
7.4
60.0
-22.5
-14.0
-
3.4
3.9
-
0.6
0.6
9.8
7.4
5.7
12.6
8.9
8.2
-
0.9
0.9
-
8.9
9.3
2,106
8.2
10.5
3.6
0.6
6.9
8.7
0.8
8.7
* For construction segment (consolidated, including international business)
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
Consolidated revenue growth guidance of 16% for FY12
For FY12, the management guided consolidated revenue at INR72b (up 16%),
standalone revenue at INR58b (up 14%), international construction revenue at INR11b
Pooja Kachhawa
+91 22 3982 5585
Pooja.Kachhawa@MotilalOswal.com
(flat) and real estate/BOT project revenue at INR4.5b.
Order intake guidance excluding in-house power project BTG (1,320MW) order of
INR50b stays at INR90b. This includes roads (INR20b), buildings (INR35b), water
(INR15b), and others.
EBITDA margin to be maintained at 9.5% in FY12
NCC is likely to maintain its EBITDA margin at 9.5-10% in FY12. This will be driven
by: (1) escalation-based contracts contributing 70% of the order book; NCC will
benefit from the pass through, given rising commodity prices, (2) favorable change
in order book resulting in an increase in relatively high-margin buildings (now
contributing 38% of the order book, up from 24% in FY10) and decline in transport
contribution (at 4% now from 15.3% in FY08).
The share of international orders in revenue has declined to 16% in 1QFY12 from
21% in 1QFY11; we expect this percentage to decline further in FY12.
Cumulative investments in RE/BOT projects at INR12b, including advances
NCC has so far invested INR12b in real estate and road BOT projects (including
advances of INR2.9b). The outstanding equity commitment stands at INR1.8b-2b.
Four out of five road BOT projects are operational and the remaining one is likely to
achieve COD by September 2011. The operational road projects should improve
NCC's operational cash flows. The Brindavan Infra road project is complete. Toll
collection, which was INR1.4m per day initially, has now reached INR2m per day.
NCC expects this to reach INR2.5m per day by FY12-end. UP Tollway has also achieved
COD and toll collection started from April 2011; current collection is INR1.8m per
day. The Pondicherry Tindivam project is in advanced stage of completion and it is
likely to declare COD by September 2011.
NCC expects financial closure of its 1,320MW thermal power project in Krishnapatnam
in the next two-three months. The project lenders have asked for 35% upfront
equity contribution for the release of 35% of the debt. NCC's total equity requirement
in the project stands at INR9.7b, out of which it has already invested INR1.5b. To
achieve the threshold of 35% equity contribution, NCC has to invest INR2b more.
The total project cost is at INR70b, to be financed with D:E of 3:1.
Valuation and view
Buy
with an SOTP-based price target of INR104 - core business: INR71/share (6x
FY13E EV/EBITDA) and BOT/RE investments: INR33/share.
August 2011
74

Sector:
Infrastructure
7th Annual Global Investor Conference
Simplex Infrastructures
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
SINF IN
49
265
0.3
515/261
0/-10/-34
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A
3/11A
3/12E
3/13E
44,427
47,624
52,210
59,872
1,227
1,232
980
1,111
24.8
24.9
19.8
22.5
-6.9
0.5
-20.4
13.3
-
11.2
14.1
12.5
-
1.3
1.2
1.1
13.1
12.0
8.7
9.1
13.3
12.6
12.2
12.6
-
0.6
0.6
0.6
-
6.1
5.9
5.8
Covering Analyst(s):
Dhirendra Tiwari
+91 22 3029 5127
Dhirendra.Tiwari@MotilalOswal.com
Key Takeaways
Management guides 10% revenue growth for FY12
The management guided revenue growth of 10% in FY12, after robust order intake
of INR79b (up 36%) in FY11. Though the management believes it can achieve 20-
25% growth, given that there is a trade-off between 'growth and payment risk
(working capital)', it has guided just 10% growth in FY12. Its focus is more on
safety of receivables than execution.
Pooja Kachhawa
+91 22 3982 5585
Pooja.Kachhawa@MotilalOswal.com
The company expects future growth to come from segments like Buildings, Urban
Infrastructure, Power T&D (mainly transmission line towers); its inherent strengths
in piling work enable it to qualify for jobs at the state level.
EBITDA margin expanded 20bp to 9.9% in FY11. Management expects margins to
be maintained in FY12.
Initial traction in order intake, YTDFY12 order intake at INR21b
Simplex's order book at the end of June 2011 was INR143b (up 17% from the end
of June 2010 and down 2.4% from the end of March 2011).
Order intake in 1QFY12 was INR9b (down 55% YoY, down 60% QoQ), driven by
muted intake in the domestic and overseas market. In FY11, thermal power
contributed 22% of the intake and buildings (largely residential) contributed 22%.
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 INR320b, mainly divided into (1) thermal: 35%, (2) industry
and construction: 20%, (3) buildings: 14%, (4) marine: 6%, and (5) 5% each for
bridges and piling, and (6) urban infrastructure: 15%, expected to be converted
into inflows over 12-18 months.
Other takeaways
Working capital position deteriorated further in 1QFY12 and currently stands at 131
days (v/s 126 days in March 2011). This represents a meaningful deterioration from
FY09 levels of 81 days.
The following have contributed to the sharp working capital increase: (1) share of
overseas business, which has shorter payment cycle, has declined to 14% of order
book from 28% earlier, (2) increased proportion of government projects has stretched
working capital cycle, but payment is secured, and (3) few private sector players in
industrial (15% of order book) and real estate (22%) segments have delayed
payments. Current debt stands at INR17.2b, up from INR16.6b as at March 2011.
Valuation and view
Buy
with a target price of INR302 (EV of 5x FY13E EBITDA).
August 2011
75

Sector:
Media
7th Annual Global Investor Conference
Dish TV India
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
DITV IN
1,064
82
1.9
94/49
8/51/75
YEAR
END
NET SALES
(RS M)
PAT
(RS M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
SALES
EV/
EBITDA
(RS) GROWTH (%)
03/10A 10,848
03/11A 14,313
03/12C 19,963
03/13C 25,307
-2,621
-1,943
-298
1,813
-3.2
-1.8
-0.3
1.7
NA
NA
NA
-708.1
NA
NA
NA
48.1
-
138.9
264.7
40.7
234
-84
-62
147
-25
-8
4
22
-
6.6
4.7
3.4
-
40.4
16.1
10.3
C: Consensus estimates
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
Key Takeaways
Subscriber additions slowing; may pick up in festive season
There is pressure on subscriber net additions, driven by macro slowdown leading to
postponement of purchases as well as likely fatigue post cricket World Cup/IPL.
DITV witnessed a decline in gross additions from 1.1m in 3QFY11 to 1m in 4QFY11
and further to 0.73m in 1QFY12. There could be further decline in 2QFY12.
However, additions are likely to pick up in the festive season; yearly addition could
be ~3m in FY12 (guidance of 3m-3.5m) v/s 3.5m in FY11.
Ramp-down in HD subscriber additions
While initial uptake of HD boxes was high, likely due to the pent-up demand and
cricket World Cup, the contribution to net additions from HD has declined to ~3%.
HD subscriptions could increase after Zee and Sony launch their HD channels.
Current population of HD boxes on an industry-wide basis is estimated at ~100,000.
ARPU trajectory unlikely to improve in near term
DITV reported an ARPU of INR150 in 1QFY12, flat QoQ. ARPU is unlikely to improve
in the near-term given weak usage trends.
Management maintains its guidance of ARPU increase to INR160-165 by 4QFY12
and would review the same during 3Q.
The company is taking steps to improve usage (on average, subscribers do not
recharge for ~5 days per month), which should improve ARPU.
However, price increases are unlikely in the near term.
Industry opportunity remains attractive; churn is a key concern area
DTH subscriber base should increase to ~60m v/s current base of 35m-40m.
Currently DITV, Airtel, and Videocon account for 25% each of the incremental
subscriber share.
Churn is a key concern area; average monthly churn for DITV increased from 0.7%
per month in 1HFY11 to 1.1% in 1QFY12.
High churn and delinquencies are key challenges to achieving growth targets.
Content costs: FY13 will set the bar
One fixed-fee contract will be coming up for renewal in FY12 while two significant
contracts will come up in FY13. Hence, there would be limited impact of contract
renegotiation this year. There were also certain one-off and event-related costs in
previous quarters, which are unlikely to repeat in coming quarters.
Valuation and view
The stock trades at EV/EBITDA of 16.1x FY12E and 10.3x FY13E consensus estimates.
Not Rated.
August 2011
76

Sector:
Media
7th Annual Global Investor Conference
HT Media
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
HTML IN
235
150
0.8
186/125
4/13/-1
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/10A 14,378
03/11A 17,861
03/12E 20,937
03/13E 24,308
1,435
1,809
2,104
2,686
6.1
7.7
9.0
11.4
615
26
16
28
-
19.4
16.7
13.1
-
2.5
2.1
1.8
15.6
14.9
13.7
15.1
11.8
13.0
13.3
15.1
-
1.8
1.5
1.2
-
9.5
8.2
6.2
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
Key Takeaways
Ad revenue growth relatively strong, despite weakness in education sector
HT Media is witnessing relatively strong ad revenue growth. The company has not
seen deceleration in growth v/s 1QFY12 levels (~17% YoY).
Print ad revenue has faced some pressure this year largely due to weak education
sector; growth in education has declined from 25-30% last year to ~12%.
All major print genres like Hindi, English (NCR), and English (Mumbai) are doing
well and could grow 16-25% in terms of ad revenue.
There is room for yield improvement in markets like Mumbai, UP, and Bihar.
Newsprint prices have likely peaked-out
Newsprint price inflation has been a cause of concern for the print companies.
However, there are early indications of softening newsprint prices, given some
reduction in scrap paper prices.
Other highlights
The radio segment remains strong and could witness revenue growth of 25-30% in
FY12.
EBITDA losses for digital business (mainly shine.com) are expected to continue;
EBITDA breakeven likely only in FY13.
Valuation and view
The stock trades at P/E of 16.7x FY12E and 13.1x FY13E EPS.
Neutral.
August 2011
77

Sector:
Media
7th Annual Global Investor Conference
Zee Entertainment Enterprises
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
Z IN
978
121
2.6
153/106
3/14/-7
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A
3/11A
3/12E
3/13E
21,966
29,414
30,337
33,591
4,686
5,860
6,289
7,302
5.2
6.0
6.4
7.5
4.1
14.5
7.3
16.1
-
20.2
18.8
16.2
-
2.7
2.6
2.4
13.0
14.2
13.8
14.8
17.8
20.1
19.7
21.9
-
3.9
3.7
3.3
-
15.2
13.7
11.7
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
Key Takeaways
Ad growth remains sluggish; festive season could drive a turnaround
Ad growth environment remains sluggish but could improve in 3QFY12, as advertisers
are likely to come back in the festive season.
Margin pressure for FMCG companies, led by higher raw material costs, and fatigue
post significant spends in cricket earlier this year led to cut in advertising, resulting
in flat ad revenue for Zee in 1QFY12.
Current visibility into the festive season remains low, but should improve by
September-end.
Investing in content and HD channels; course correction in 2HFY12 if ad growth
does not pick up
Zee has been investing in higher original programming hours per week for the
flagship channel, which will continue as planned unless there is no pick-up in ad
environment.
Sony has been giving tough competition to the flagship Zee TV for the number-3
slot. Zee is likely to continue investing in Hindi GEC as well as the regional space,
given strong competition.
Despite a 600bp cumulative decline in non-sports EBITDA margin over the past
three quarters, core business margin remains strong at ~35%.
Zee would also be launching HD channels by September-end and could be incurring
capex of ~INR550m and incremental opex of ~INR350m/year towards the same.
Sports business guidance maintained
After incurring a loss of INR0.57b in 1QFY12, the sports segment is likely to end
FY12 with a loss of ~INR1b.
Sports business had incurred a loss of INR2.1b in FY11.
Valuation and view
The stock trades at P/E of 18.8x FY12E and 16.2x FY13E earnings.
Neutral.
August 2011
78

Sector:
Metals
7th Annual Global Investor Conference
Hindalco Industries
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
HNDL IN
1914
144
6.0
252/129
-6/-21/-8
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
SALES
EV/
EBITDA
3/10A
3/11A
3/12E
3/13E
607,221
720,779
798,024
812,334
19,132
34,218
37,121
36,604
9.6
17.2
18.7
18.4
-19.0
78.3
8.5
-1.4
-
8.4
7.7
7.8
-
1.6
1.4
1.2
14.0
19.5
17.8
15.1
8.3
9.2
9.4
8.9
-
0.7
0.6
0.6
-
5.6
5.6
5.5
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Key Takeaways
Utkal Alumina: slow but progressing
Despite having all the statutory clearances in place for a long time, 1.5mtpa Utkal Alumina
refinery has faced delays. A weaker administration and local disturbances have been
challenging and dragging the project. The company has recently completed negotiations
with the locals and now expects no further disturbances. The project is expected to be
commissioned in 2HCY12.
Though the bauxite will be initially transported by trucks, the cost is likely to increase by
only USD5/ton because the distance between the bauxite mine and refinery is only
~24km. nearly 10kms of bitumen road has already been constructed. The land for
laying conveyor belt from mine to refinery for transporting bauxite has now been acquired
and the possession taken. The conveyor belt will be commissioned in next 24 months.
Hindalco has faced cost overrun in the project and revised expected cost of production
(CoP) is USD140-150/ton (Vs USD110/ton estimated earlier).
Mahan smelter: may look to buy merchant power
Hindalco expects 359ktpa Mahan smelter to get commissioned in 2HCY12. Since there is
still no visibility of coal for its captive power plants, Hindalco may explore the option of
buying power directly in merchant market as lot of new power generation capacities
(11 power plants) are expected to get commissioned in the region. If the merchant
power is not attractive, 900MW (150MW *6 units) CPP will be commissioned in phases.
It expects the cost of production of aluminum in the range of USD1700-1900/ton depending
upon the availability of raw materials.
Novelis: on track to achieve its targeted EBITDA
Novelis is on track to achieve its targeted US$1.15-1.2b EBITDA through de-bottlenecking,
expansions in emerging markets and focusing on product mix improvement. Novelis
expects demand for Cans to remain stable (form ~50-55% of revenue) and is experiencing
positive traction in demand from automobiles segment (form 15% of revenue).
Current valuations ignore growth; Maintain Buy
Strong and stable cash flows from business of Novelis and copper smelter have reduced
volatilities in the consolidated earnings of Hindalco. Utkal and Mahan projects are moving
slowly and steadily. The stock trades at attractive PE of 8.2xFY13 and EV/EBITDA
5.7xFY13. In our estimate, we are not factoring upside from Utkal and Mahan projects.
Maintain
Buy.
Tushar Chaudhari
+91 22 3982 5425
Tushar.Chaudhari@MotilalOswal.com
August 2011
79

Sector:
Metals
7th Annual Global Investor Conference
Hindustan Zinc
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
HZ IN
4,225
127
11.8
155/102
2/11/25
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
3/10A
3/11A
3/12E
3/13E
80,170
99,121
121,271
127,979
40,414
49,179
65,676
69,707
9.6
11.6
15.5
16.5
48.2
21.7
33.5
6.1
-
10.9
8.2
7.7
-
2.4
1.9
1.5
22.3
21.8
23.0
20.0
22.9
21.4
21.7
18.9
-
3.9
2.7
2.0
-
7.0
4.6
3.5
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Key Takeaways
Timely commissioning of 100ktpa lead smelter to drive metal volumes
Hindustan Zinc's (HZ) 100ktpa Dariba lead smelter project is in an advanced stage of
completion and is expected to start commercial production by end of September 2011.
Silver being a co-production in lead smelting, the capacity of silver will also expand
from 150tpa to 500tpa.
Silver and Lead volumes to grow sharper
Sindesur Kurd (SK) mine is expected to ramp up to 1.5mt in FY12 and to 2mt in FY13.
Silver volumes are expected to grow at 77% CAGR to 460 tons over FY11-13. Lead
production will grow at 56% CAGR to 140k tons over FY11-13. Zinc sales volumes are
expected to be CAGR of 6% over FY11-13. In FY12, HZ expects to invest INR14b on a
lead smelter project, INR3b for sustainability Capex and INR5b for de-bottlenecking
projects.
Cost of production including royalties to range ~USD1,000/ton over the next
two years
The cost of production (CoP) is one of the lowest in world due to HZ's fully integrated
operations and large resource base. Including royalties, the cost of production of zinc
has been US$800-1,000/ton over the past five years. The cost structure is mainly driven
by coal, diesel and reagents. Going forward, costs are not expected to decline significantly
as the cost of underground mining at its Rampura Agucha mine will be higher. Mining
costs will be USD300-325 per ton of concentrate. The stripping ratio will taper down
over the next three years.
Higher dividend pay-out essential for re-rating; Maintain Buy
Cash and equivalents now stand at INR157b. High dividend payout is essential for re-
rating of stock, in our view. Maintain
Buy.
Tushar Chaudhari
+91 22 3982 5425
Tushar.Chaudhari@MotilalOswal.com
August 2011
80

Sector:
Metals
7th Annual Global Investor Conference
Jindal Steel & Power
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
JSP IN
935
500
10.2
755/451
-8/-15/-16
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A
3/11A
3/12E
3/13E
110,915
131,116
169,865
200,109
35,837
37,539
40,036
49,479
37.9
40.1
42.8
52.9
10.5
6.0
6.7
23.6
-
12.5
11.7
9.4
-
3.3
2.6
2.1
33.9
26.6
22.3
21.9
24.3
17.9
14.8
14.5
-
4.6
3.8
3.4
-
9.4
9.2
7.9
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Key Takeaways
Angul steel project, captive power plant (10x 135MW) delayed
Jindal Steel and Power (JSP) expect five units of its 135MW unit to be commissioned
in FY12 and the remaining two units are expected to be commissioned in FY13.
Tushar Chaudhari
+91 22 3982 5425
Tushar.Chaudhari@MotilalOswal.com
The two units of 135MW already commissioned at Tamnar are still facing teething
problems due to the high ash content in the coal middlings. JSP is mixing coal with
these middlings and the plants are expected to stabilize in two months. One unit of
135MW, commissioned at Angul stabilized recently.
A 2mtpa gas-based DRI plant is expected to be commissioned by September 2012.
Earlier JSP planned to commission a 1.5mtpa plate mill and DRI unit by March 2012.
As most of the clearances for its captive mine at Angul (Utkal B1) are in place, JSP
expects to start production in six months.
First unit of 600MW Tamnar II project to be commissioned by October 2013
Jindal power's expansion at Tamnar, where JSP is setting up a 2,400MW power
project, is still on hold. JSP has received environment clearance for the project
subject to the coal tie up/linkage, but it has yet to receive consent to establish.
For first phase of the 1,200MW, JSP has received coal linkages. For the next phase
of 1200MW, the coal will be sourced from Jindal Steel, Mozambique.
The company expects to receive final environment clearance and consent to establish
for the first phase by October 2011. It has spent ~INR16b on the project and the
first unit of 600MW is expected to be commissioned in 24 months from the date of
receipt of the consent to establish.
Play on rich resources
JSP recently received a mining lease for four coking coal mines in Queensland,
Australia for which it had applied about two year ago. Initial drilling has begun.
JSP has also acquired 27.3% stake in Rockland Richfield, which has ~700mt of
coking coal reserves. JSP made an open offer for further purchase of stake and
increased control in the company (valuing it at USD88m).
The first shipment of iron ore from Bolivia is expected in a few weeks. The company
expects 0.5m ton of volumes in FY12 with net margins of USD50/ton at current iron
ore prices.
Commissioning of DRI project, Angul coal mine near-term triggers; Buy
The earnings growth in FY12 will be subdued due to delay in ramping up of captive
power plants. The merchant power rates in forward market have started improving,
which will boost the earnings in FY13.
We remain positive on the stock due to its rich portfolio of coal and iron ore resources.
JSP has been able to deliver superior earnings growth through judicious capital
allocation in high margin businesses. Maintain
Buy.
August 2011
81

Sector:
Metals
7th Annual Global Investor Conference
JSW Steel
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
JSTL IN
223
663
3.2
1,400/595
-11/-16/-31
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A 189,572
3/11A 239,002
3/12E
3/13E
280,529
289,667
11,338
17,261
10,824
11,420
60.6
77.4
48.5
51.2
8.9
27.6
-37.3
5.5
-
8.6
13.7
13.0
-
0.9
0.9
0.8
12.6
10.6
6.4
6.4
10.1
8.8
7.3
7.8
-
1.4
1.2
1.1
-
7.0
7.9
6.6
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Key Takeaways
FY12 saleable steel production target unchanged at 8.5mt
JSW Steel (JSTL) has maintained its FY12 production target of 8.5mt despite a recent
ban on iron-ore mining in Bellary district. The CEC recently recommended to the Supreme
Court that iron ore production in Chitradurga and Tumkur districts also be stopped to
prevent illegal mining and further damage to the environment. The Supreme Court
verdict is awaited but JSTL is optimistic about its steel production target. JSTL believes
that there is iron ore inventory of ~25mt in the system, which will be available for sale
and thus production in the state will not be affected.
Average cost of iron ore to increase by INR500/ton
Per ton average cost of iron ore is expected to increase by INR500 and margins are
expected to hover around USD170 per ton in FY12.
Volumes, margins to be affected; Timely ramp up by NMDC may help
We believe that volumes and margins will be affected due to the closing of mines in
Karnataka. Although NMDC has been allowed to mine up to 12mt a year in the state, we
do not expect NMDC to ramp up production adequately in FY12. Maintain
Sell.
Tushar Chaudhari
+91 22 3982 5425
Tushar.Chaudhari@MotilalOswal.com
August 2011
82

Sector:
Metals
7th Annual Global Investor Conference
Tata Steel
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
TATA IN
959
470
9.9
714/450
-7/-14/1
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A1,023,931
3/11A1,187,531
3/12E 1,383,421
3/13E 1,469,613
-8,255
59,724
59,602
76,906
-9.3
62.3
61.4
79.2
-n/a-
-n/a-
-1.4
29.0
-
15.2
15.4
11.9
-
4.5
2.8
2.3
-9.7
29.4
18.0
19.4
4.5
11.4
9.5
11.0
-
1.2
1.0
0.9
-
8.7
8.5
7.0
Covering Analyst(s):
Sanjay Jain
+91 22 3982 5412
SanjayJain@MotilalOswal.com
Key Takeaways
Indian operations: Projects and volume growth are on track
Tata Steel's (TATA) ongoing capacity expansion at Jamshedpur from 6.8mtpa to 10mtpa
is on track and expected to be commissioned by 4QFY12. The company expects ~1.5mt
of incremental production in FY13. Crude steel production is expected to range 7.5-8m
tons in FY12.
Indian operations: Margins outlook remains robust
Margins in the Indian business are expected to remain steady despite sluggish steel
market in recent months. The regional premium over international flat steel product
prices is likely to bounce back in India because the actual supply growth will be less than
capacity addition due to shortage of iron ore in South India post mining ban in Bellary.
Europe: uncertain outlook for few quarters only
Tata Steel Europe (TSE) is on track to improve its operating parameters through
restructuring of long product business, modernizing facilities and improving product
efficiencies over the next two years. Ongoing restructuring at its long product division is
expected to help the company to cut its fixed costs and overheads. It will reduce its staff
strength by ~1,500 employees and ramp down its 1mtpa blast furnace.
TSE plans to improve its performance at Port Talbot by a rebuilding blast furnace and
reducing electricity costs due to availability of waste gases. TSE is trying to keep building
up carbon credits for FY13 by keeping FY12 production at 14m-14.5mt as demand is
expected to be subdued over the next two quarters for seasonal reasons.
Steel prices are expected to bottom now because finished steel stocks in Europe are
low, while import pressure is easing. Average steel realization for 2QFY12 is expected
to remain flattish with a negative bias as steel prices were weaker, which may put
pressure on margins. Though the margin outlook for next 2 quarters is uncertain due to
timing difference between costs and sales prices from accounting point of view, the
cash margins are likely to be less volatile because TSE is essentially in conversion
business.
Valuation and view
Capex guidance remains unchanged at USD2.3b-2.5b for the group. We expect strong
earnings growth due to volume growth in high margin Indian business though there are
uncertainties in the near term. Maintain
Buy.
Tushar Chaudhari
+91 22 3982 5425
Tushar.Chaudhari@MotilalOswal.com
August 2011
83

Sector:
Oil & Gas
7th Annual Global Investor Conference
BPCL
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
BPCL IN
362
690
5.5
815/530
16/31/10
YEAR
END
NET SALES ADJ. PAT ADJ. EPS
(INR B)
(INR B)
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
SALES
EV/
EBITDA
03/10A
03/11A
03/12E
03/13E
1,238
1,536
1,832
1,750
16.3
16.3
19.0
20.6
45.2
45.2
52.6
56.9
157.6
0.2
16.2
8.3
-
15.3
13.1
12.1
-
1.5
1.4
1.3
11.9
11.1
12.0
11.9
3.9
5.9
7.5
6.6
-
0.3
0.2
0.2
-
10.3
7.8
7.0
*Consolidated
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Key Takeaways
New government initiatives to reduce subsidy in medium term
The management expects the recently announced government initiatives on PDS
kerosene and domestic LPG to help reduced subsidy over the medium term.
The LPG initiative will be implemented in two phases; phase-1 (internal systems are
ready) will limit the number of cylinders per household while phase-2 (post UID
scheme implementation) will involve selling LPG cylinders at market price and
transferring subsidy in cash directly to the eligible LPG customers' bank accounts.
E&P reserves to be published by end-2013
The reserve estimates for BPCL's successful E&P discoveries in Brazil (2) and
Mozambique (4) are likely to be announced by end-2013, post appraisal by third-
party consultants.
BPCL plans to spend INR100b (USD250m each in FY12/13, INR24b spent till date) on
E&P (BPCL share) over the next five years and expects production to commence in
2017/18, first in Mozambique.
Gas production at Mozambique is likely to be evacuated through LNG route.
To spend INR400b in next five years v/s INR250b in last five
As against INR250b spent in the last five-year plan, BPCL expects to spend ~INR400b
in the next five-year plan, driven by refinery expansion and E&P spends.
Capex includes planned capacity expansion of Kochi refinery from 9.5mmtpa to
15mmtpa and petrochem complex with an investment of INR60b. Kochi refinery
complexity will increase from the current 5 to 9.
Bina refinery utilization rate to reach 80% by 4QFY12
Most of the processing and support facilities like SPM, crude oil terminal, and 935km
crude pipeline have already been commissioned.
Despite some power plant related delays, the management expects utilization to
reach 80% in 4QFY12 at its new 6mmpta, INR122b Bina refinery (JV with Bharat
Oman, BPCL stake 49%).
Once the Bina refinery stabilizes and operates for a full year, the management plans
to further increase capacity from 6mmtpa to 8.5mmtpa by FY15/16.
Valuation and view
In the event of subsidy rationalization and decontrol of retail fuel prices, marketing
profits would improve and the stock could see a re-rating.
The stock trades at 13.1x FY12E EPS of INR52.6 and 1.4x FY12E BV. E&P business
could provide upside potential.
Buy.
August 2011
84

Sector:
Oil & Gas
7th Annual Global Investor Conference
HPCL
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
HPCL IN
339
382
2.8
555/307
8/29/-14
YEAR
END
SALES
(INR B)
ADJ.PAT ADJ.EPS
(INR B)
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/10A 1,092.1
03/11A 1,309.3
03/12E 1,575.2
03/13E 1,583.5
13.0
15.4
13.5
14.1
38.4
45.4
39.9
41.6
198.8
18.3
-12.2
4.5
-
8.4
9.6
9.2
-
1.0
1.0
0.9
11.7
12.8
10.4
10.2
8.7
8.6
7.4
8.5
-
0.2
0.2
0.2
-
8.2
7.9
5.8
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Key Takeaways
Hopeful on policy reforms to reduce under-recoveries
The management indicated that it has the back-end ready for the government's
recently announced policy to limit the number of domestic LPG cylinders per household.
However, it ruled out dual pricing in diesel due to practical difficulties in
implementation.
Bhatinda refinery commercial production likely by end-2011
The management indicated that its new 9mmtpa Bhatinda refinery (JV with Mittal
Energy Investments, HPCL stake at 50%) with Nelson Complexity of 12+ is mechanically
complete and expects commercial production to commence by December 2011.
The final capex of the refinery stands at ~INR190b. HPCL expects refining margins
to higher by ~USD6/bbl over the regional benchmark Singapore margins.
New greenfield refinery planned in Maharashtra
HPCL is planning to set up a 9-18mmtpa greenfield refinery in Ratnagiri district in
Maharashtra.
While it has already received some land allocation, the management indicated that
it will require additional land for the project.
To expand Visakh refinery to 15mmta (currently 8.5mmtpa)
As against the earlier trend of annual capex of ~INR350b per year, HPCL is planning
to spend ~INR400b-450b per year in the next two years.
It also plans to expand the Visakh refinery capacity from the current ~8.5mmtpa to
15mmtpa, with a capex of INR80b by FY15/16 (currently, detailed feasibility report
is being prepared).
Some of the key ongoing/completed projects include:
- LOBS quality upgradation at Mumbai: Mechanically complete; estimated cost:
INR10.3b
- Single-point mooring at Visakh: Commissioned; total cost: INR6.4b
- New 1.45mmtpa FCCU at Mumbai: Mechanically complete; estimated cost: INR9b
- New diesel hydrotreater at Mumbai and Visakh: Targeting completion by
September 2011; estimated cost: INR70b
Valuation and view
In the event of subsidy rationalization and decontrol of retail fuel prices, marketing
profits would improve and the stock could see a re-rating.
The stock trades at attractive valuations of 9.6x FY12E EPS of INR39.3 and 1x FY12E
BV.
Buy.
August 2011
85

Sector:
Oil & Gas
7th Annual Global Investor Conference
Oil India
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
OINL IN
240
1,323
7.0
1,635/1,207
17/18/3
YEAR
END
NET SALES
(INR B)
PAT
(INR B)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/08A 61,185
03/09A 72,007
03/10A 79,226
03/11A 86,115
17,889
21,617
26,105
28,877
74.4
89.9
108.6
120.1
9.1
20.8
20.8
10.6
-
-
-
11.0
-
-
-
2.0
24.3
25.0
22.6
19.6
33.9
39.3
34.1
29.0
-
-
-
2.6
-
-
-
4.7
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Key Takeaways
Strong RRR, OINL expects strong oil, gas production growth
Oil India (OINL) posted impressive RRR of >1.6 over the past five years and low
finding and development costs of ~USD5.5/bbl in FY11.
The management's FY12 guidance is for 4% crude production growth to 3.76mmt
and 12% gas production growth to 7.2bcm. However the management expects oil
production growth to be better than the guidance suggests.
OINL looks for value buys
OINL's cash reserves of >USD2b gives it options for overseas acquisitions.
Since OINL's overseas E&P portfolio is more of exploration blocks, the company is
looking to acquire discovered/producing assets.
OINL has formed a JV with IOC for overseas acquisitions and it has tied up with GAIL
India to invest in overseas shale gas prospects.
OINL optimistic about exploration acreage
OINL's historical success rate has been 70% against the global average of 30%.
OINL expects the success rate to drop going forward. However, even on a conservative
basis if the rate were to fall to 30% OINL hopes to build strong reserves in its NELP
acreage.
Prioritizing drilling program, work hit in MENA region blocks
OINL's planned FY12 capex is ~INR32b, including 52% on exploration and appraisal,
27% on development and 11% on overseas projects.
On the international front, due to political instability, E&P work in Egypt and Yemen
has been stalled and OINL is prioritizing its drilling schedule based on prospects of
striking oil.
In terms of key exploration blocks, OINL will focus on blocks in the KG Basin, Mizoram
and Gabon.
OINL plans to drill 34 exploratory and 34 development wells in FY12 v/s 16 exploratory
and 25 development wells in FY11.
Valuation and view
The stock trades at 11x FY11 EPS of INR120.
We are positive on OINL in view of likely subsidy rationalization.
Not Rated.
August 2011
86

Sector:
Oil & Gas
7th Annual Global Investor Conference
ONGC
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
ONGC IN
8,555
287
53.6
368/248
15/16/2
YEAR
END
NET SALES
(INR B)
PAT
(INR B)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
BOE
EV/
EBITDA
03/10A
03/11A
03/12E
03/13E
1,018
1,176
1,417
1,557
194
210
249
314
22.7
24.5
29.1
36.8
-2.0
8.1
18.6
26.4
-
11.3
9.5
7.5
-
2.1
1.8
1.6
20.2
19.5
20.3
22.3
19.4
19.2
19.9
21.7
-
6.7
6.7
6.4
-
4.4
3.6
2.9
*Consolidated
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Key Takeaways
Upstream subsidy share to be limited at 1/3rd
Though FY11 upstream sharing at 38.7% was a negative surprise, the ONGC
management expects FY12 sharing to be capped at 33% (1QFY12 at 33%).
The management has a positive view on government policy changes, which it believes
are primarily driven by increased awareness of the negative impact of ad-hoc subsidy
burden. It believes these changes will be favorable for the sector and the company,
The company indicated that the decision on the timing of the proposed FPO (follow-
on public offer), where the government plans to sell 5% stake in ONGC (current
stake at ~74%), will be taken by the Department of Divestment (DoD).
Post royalty issue resolution, Cairn's Rajasthan production to ramp up
Once the royalty and cess issue resolution, ONGC expects that the focus will once
again be on operational issues and expects production to ramp up soon after.
The management expects a one-time gain post resolution of royalty issue with
Cairn India, on account of royalty that ONGC has already paid.
E&P capex intensity to continue
ONGC is the largest hoder of domestic E&P acreage, garnered through nomination
as well as NELP rounds. It controls 51% of the PEL area and 67% of the mining
lease area in India.
ONGC's capex has increased at 21% CAGR in the last four years to INR283b in FY11
and is likely to grow 6% in FY12 to INR300b.
Led by its continuous IOR/EOR investments, ONGC has been able to maintain
production at its mature fields v/s 9% decline in the non-OPEC mature fields.
Production ramp-up from marginal fields likely
Led by development of marginal fields, the management expects a meaningful increase
in 2013 oil production rate to ~28mmt (currently at ~25mmt) and gas production to
72mmscmd (currently at ~65mmscmd).
ONGC expects increase in oil production from the development of its East coast
offshore blocks that are likely to commence production in FY12. Increase in gas
production will be driven by: (1) Daman offshore development, and (2) Tripura
(estimated requirement of ~3.5mmscmd for new gas power plant).
Valuation and view
The stock trades at 9.9x FY12E EPS of INR29.1. Our SOTP-based target price is
INR346.
Buy.
August 2011
87

Sector:
Oil & Gas
7th Annual Global Investor Conference
Reliance Industries
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
RIL IN
3,274
756
54.1
1,187/722
-1/-13/-12
YEAR
END
NET SALES
(INR B)
PAT
(INR B)
EPS
(INR)
P/E
(X)
ADJ. EPS*ADJ. P/E ADJ. P/B
(INR)
(X)
(X)
ROE
(%)
ROCE
(%)
EV/
EBITDA
03/10A
03/11A
03/12E
03/13E
1,925
2,482
2,993
2,670
162
203
224
240
49.6
62.0
68.3
73.2
15.2
12.2
11.1
10.3
54.8
68.4
75.3
80.8
-
11.1
10.0
9.4
-
1.6
1.4
1.1
13.4
14.8
14.3
12.7
-
12.9
13.1
12.2
-
7.5
6.9
6.1
Covering Analyst(s):
Harshad Borawake
+91 22 3982 5432
HarshadBorawake@MotilalOswal.com
Key Takeaways
FY12 GRM till-date significantly above last two years
RIL's refining utilization rates (12-month average: 107%) have been significantly
above global averages, led by its advantage due to economies of scale and lower
operating costs.
As against the dismal refining margins in the last two years (USD6.7/bbl in FY10
and USD8.4/bbl in FY11), margins have been strong in FY12, with 1QFY12 average
of USD10.3/bbl. We model full-year margins of USD9.9/bbl and believe that the
global economic health will have a bearing on the refining industry.
RIL had reported 1QFY12 GRM at USD10.3/bbl, implying a premium of USD1.8/bbl
over benchmark Singapore GRM. We model full-year margins of USD9.9/bbl and
believe that the global economic health will have a bearing on the refining industry.
2QFY12 average Reuters Singapore GRM till-date have averaged USD8.6/bbl v/s
USD8.5/bbl in 1QFY12.
Doubling petchem capacity
RIL has announced downstream projects, with an estimated capex of USD11-12b,
which include (1) doubling of polyester capacity, (2) setting up of new 1.5mmtpa
off-gases based cracker, and (3) integrated gasification combined cycle (IGCC) project.
Polyester capacity will double post expansion and the units should start commissioning
from 2013.
1QFY12 witnessed de-stocking due to volatile prices and fiscal tightening in China.
However, 2H is likely to be better, led by seasonal factors like Diwali and Christmas
driving demand.
Shale gas production to ramp-up, BP's entry would accelerate E&P plans
We believe that the recent tie-up with BP is a game changer event for RIL's E&P
plans, providing the best in-class technical support. This could lead to accelerated
business ramp up over the next 2-3 years.
BP has already given USD2b (of the total USD7.2b) and is likely to give the remaining
amount in two tranches. The first tranche is expected to come in the coming month
and the last by 3QFY12.
Of the three shale gas JVs, two have commenced production and the third is likely
to start production in the current quarter. Shale gas production should ramp up
meaningfully in the next few years.
Valuation and view
Adjusted for treasury shares, RIL trades at 10.3x FY12E EPS of INR75.3.
Our SOTP-based target price is INR1,025.
Neutral.
88
August 2011

Sector:
Pharmaceuticals
7th Annual Global Investor Conference
Biocon
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
BIOS IN
200
329
1.4
465/302
4/10/5
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/10A 23,678
03/11A 27,707
03/12E 20,602
03/13E 24,039
2,932
3,675
3,698
4,468
14.7
18.4
18.5
22.3
215.2
25.3
0.6
20.8
-
17.9
17.8
14.7
-
3.2
2.9
2.5
16.7
18.1
16.2
17.2
15.6
19.3
17.9
19.0
-
2.2
2.8
2.4
-
10.2
9.7
8.2
Covering Analyst(s):
Nimish Desai
+91 22 3982 5406
NimishDesai@MotilalOswal.com
Key Takeaways
Guidance: Topline growth of 15-17% (ex-Axicorp) and EBITDA margin of 30%
in FY12
The management has guided topline growth of 15-17% (Ex-Axicorp) and has re-iterated
its guidance of ~30% EBITDA margin for FY12. It estimates R&D expenditure at 8% of
revenue in FY12. The management has guided capex of INR1b-1.5b for FY12, which is
in addition to the USD160m capex planned over three years to service the Pfizer contract.
The company expects tax rate of 20-22% for FY12 against 16% in FY11, as some of its
tax covers have expired.
Expect strong growth in Insulin, partially led by Pfizer launching it in emerging
markets
The management has guided doubling of revenue from Insulin and Immunosuppressant
segments over the next three years, implying a CAGR of 26% over FY11-14. This will be
partially led by Pfizer launching human insulin in various emerging markets including
India in partnership with Biocon. The company expects the launch of Rh Human Insulin
in Europe in 2013. Currently, the drug is undergoing phase-III clinical trials. Biocon has
also indicated that it will shortly begin the development of Glargine.
Contract Research (CR) - improving profitability
Biocon's management expects profitability to improve in its CR business, led by the
change in its focus to deliver value-added integrated drug development (IDD) services
as against FTE-based services. The transition from FTE to IDD model had adversely
impacted its profitability in FY11. The management has guided 20% revenue growth for
the business in FY12 while it expects EBITDA margin at 30%+, as capacity utilization at
Syngene has improved.
Valuation and view
Key growth drivers for FY12/13 will be: (1) traction in the company's Insulin initiative
and Pfizer contract in emerging markets, (2) ramp-up in contract research business,
and (3) incremental contribution from immunosuppressant API supplies. Option values
for the future include separate listing of Syngene and potential out-licensing of the Oral
Insulin NCE. We estimate EPS at INR18.5 (up 6%) for FY12 and INR22.3 (up 20.8%) for
FY13. The stock currently trades at 17.8x FY12E and 14.7x FY13E EPS.
Buy,
with a
target price of INR402 (18x FY13E EPS).
Amit Shah
+91 22 3982 5423
Amit.Shah@MotilalOswal.com
August 2011
89

Sector:
Pharmaceuticals
7th Annual Global Investor Conference
GlaxoSmithKline Pharmaceutical
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
GLXO IN
85
2,150
4.0
2475/1850
6/7/18
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
12/09A
12/10A
12/11E
12/12E
18,708
21,116
23,740
26,921
5,049
5,814
6,567
7,586
59.6
68.6
77.5
89.6
12.6
15.2
12.9
15.5
-
31.3
27.7
24.0
-
9.4
8.7
8.0
28.7
30.1
31.3
33.4
43.0
44.8
46.3
49.5
-
7.6
6.8
5.9
-
21.8
20.2
17.2
* Consolidated; EPS is fully diluted
Covering Analyst(s):
Nimish Desai
+91 22 3982 5406
NimishDesai@MotilalOswal.com
Key Takeaways
To sustain double-digit top-line growth
GlaxoSmithKline Pharmaceuticals (GLXO) management expects to sustain 12-14% top-
line growth until CY15. However, it expects CY11 top-line growth to be at the lower end
of its guidance due to increased competition. GLXO's pharmaceutical sales grew ~13%
in 1HCY11. GLXO's growth will be led by a focus on priority products, expanding
therapeutic and geographic coverage and incremental contribution from new launches.
EBITDA margins guidance at 33-35%
The management indicated it would sustain EBITDA margins at 33-35% until CY15
despite an increase in its field force. GLXO's strong brand equity with doctors enables it
to sustain premium pricing for many of its brands resulting in high profitability. However,
the management indicated that there was no room for margin improvement.
Aggressive new launches
GLXO indicated that its parent was strongly committed to the Indian operations. This is
evident from the fact that many new products were launched over CY08-10, including
four vaccines including Cervarix (cervical cancer vaccine for women). GLXO intends to
launch 6-7 new products in 2HCY11 and in 1HCY11 it launched six new products. Among
the launches over the past two years, we believe Cervarix, Rotarix (Rotavirus vaccine)
and Revolade (platelet aggregator) hold good long-term potential.
Expanding a rural presence
GLXO is expanding in rural areas. The management believes that to be successful in
rural areas, a company needs products, medical infrastructure and will have to follow
different marketing practises than in urban areas.
DPCO may pose a threat
The management believes that if all the products mentioned in the New List of Essential
Medicines come under DPCO, it would have a significantly adverse impact on the company
and the industry. However the management is not sure about how and in what form the
policy will be implemented.
Valuation and view
GLXO deserves premium valuations due to strong parentage (giving it access to a large
product pipeline), brand-building ability and likely positioning in the post-patent era. It is
one of the few companies with the ability to drive reasonable growth without major
capital requirement, leading to high RoCE of over 45%. The stock is valued at 27.7x
CY11E and 24x CY12E earnings. Maintain
Buy
with a target price of INR2,328 (26x
CY11E).
Amit Shah
+91 22 3982 5423
Amit.Shah@MotilalOswal.com
August 2011
90

Sector:
Pharmaceuticals
7th Annual Global Investor Conference
Glenmark Pharmaceuticals
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
GNP IN
270
323
1.9
390/242
16/24/26
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/10A 24,616
03/11A 29,491
03/12E 37,007
03/13E 40,693
3,310
3,548
4,584
5,612
11.6
12.5
16.1
19.7
174.9
7.2
29.2
22.4
27.7
25.9
20.0
16.4
3.7
4.3
3.2
2.7
14.1
17.4
17.0
17.1
12.7
13.4
15.3
16.3
4.3
3.6
2.8
2.5
17.6
18.0
10.6
11.3
Note - Company has commenced IFRS accounting wef FY11. Estimates exclude one-off upsides
Covering Analyst(s):
Nimish Desai
+91 22 3982 5406
NimishDesai@MotilalOswal.com
Key Takeaways
FY12 guidance: 23-25% top-line growth, 22-23% EBITDA margin
Glenmark Pharmaceuticals (GNP) management reiterated its 23-25% top-line growth
guidance for FY12 and EBITDA margin guidance of 22-23% (both excluding NCE-related
income). GNP estimates R&D expenses at INR2.25b and tax rate guidance is 14%. The
management aims to cut net debt to INR16b by the end of FY12. Debtor days are
expected to be at 125-130 days.
US revenue to grow ~25%; RoW, LatAm to grow 30%+
The management guidance is for ~25% revenue growth in the US to ~USD225m in
FY12. It has ~40 ANDAs awaiting US FDA approval (with four FTFs) and the management
believes ~75% of the pending ANDAs are in the niche/low-competition category. It
launched four oral contraceptives (OCs) out of six approvals over the past few quarters.
The management guidance is for 30% revenue growth for the RoW and 40% revenue
growth for LatAm in FY12.
Domestic formulations business to sustain 16-18% growth
The management indicated that GNP's domestic formulations business slowed in line
with the industry trend. However, GNP expects to sustain growth in the domestic
formulations business, which posted 16% CAGR over FY08-11.
Novel drug discovery: No further milestone income in FY12; FY13 to see some
developments
Management does not expect further milestone income in FY12 but it indicated that in
FY13 GRC15300 and GBR500 would move to the next stage of clinical trials, which would
trigger milestone payments. In FY13 GNP expects (1) to get phase II clinical trial data of
Rivamilast (GRC4039) for asthma and rheumatoid arthritis and (2) to complete phase I
clinical trial for GRC17536, after which it will evaluate out-licensing opportunities for
both the molecules.
Valuation and view
GNP has differentiated itself among Indian pharmaceutical companies through significant
success in NCE research (resulting in licensing income of USD202m so far). Given this
success, GNP has been adding new NCEs to its pipeline, which will put pressure on its
operations in the short to medium term as it will have to fund R&D expenses for these
NCEs on its own. High interest costs and the likely absence of strong forex gains will
pare FY12 operational performance. We expect EPS of INR16.1 in FY12 and INR19.7 in
FY13. The stock trades at 20x FY12E and 16.4x FY13E earnings with about 15-16%
RoCE. Maintain
Neutral
with a target price of INR310 (15x FY13E EPS + INR14 DCF
value of Crofelemer and Para-IV pipeline).
Amit Shah
+91 22 3982 5423
Amit.Shah@MotilalOswal.com
August 2011
91

Sector:
Pharmaceuticals
7th Annual Global Investor Conference
Lupin
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
LPC IN
446
440
4.3
520/348
10/17/30
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/10A 47,405
03/11A 57,068
03/12E 64,784
03/13E 74,127
6,816
8,582
9,913
11,418
15.3
19.3
22.3
25.7
34.8
25.9
15.5
15.2
28.7
22.8
19.7
17.1
7.6
6.0
4.9
4.1
34.1
29.3
27.1
25.7
27.5
25.1
28.2
27.1
4.3
3.6
3.1
2.7
24.1
19.1
16.4
13.5
Covering Analyst(s):
Nimish Desai
+91 22 3982 5406
NimishDesai@MotilalOswal.com
Key Takeaways
Guidance
Lupin (LPC) management did not give any official guidance but indicated that LPC may
grow slower in FY12 than it did in FY11 (when it posted 20% top-line and 27% EPS
growth) but FY13 would be a good year. The guidance is for better growth and improved
EBITDA margins in 2HFY12, led by recovery of growth in the US generics business
(driven by new launches) and sustained double-digit growth for the Japan and India
formulations businesses.
LPC to continue to outperform average industry growth in the domestic
formulations business
Management has guided that LPC will outperform the average industry growth in the
coming years led mainly by its entry into new therapies, expansion of the field force,
aggressive new launches and gradually increasing penetration in tier-II towns. LPC
indicated that the current slowdown in the average industry growth was temporary in
nature.
Niche/patent challenge product launches in the US to continue
We believe the trend of launching niche/patent challenge products in the US will continue
and helped by commercialization of oral contraceptive and ophthalmology products from
FY13. Overall, LPC has a strong pipeline of 101 ANDAs pending approval, of which 15
are FTFs and four likely to be granted sole 180-day exclusivity. The remaining are
eligible for shared 180-day exclusivity.
LPC better positioned to exploit Japanese market
LPC expects to launch 6-7 new products in Japan in FY12. We forecast 17% CAGR for
LPC's Japanese business over FY11-13. The management indicated that it may look at
inorganic opportunities in Japan, to expand its therapeutic presence and establish its
presence in the hospitals segment.
Valuation and view
Key growth drivers for the future include an expanding US generics pipeline, niche/
Para-IV opportunities in the US, strong performance in India and emerging markets and
sustained traction in Japan. The stock trades at 19.7x FY12E and 17.1x FY13E EPS, with
sustained RoE of 25-27%. Our estimates do not include potential Para-IV and OC upsides
but take into account the likely generic competition for Suprax (thus impacting FY13E
EPS). Maintain
Buy
with a target price of INR514 (20x FY13E EPS).
Amit Shah
+91 22 3982 5423
Amit.Shah@MotilalOswal.com
August 2011
92

Sector:
Pharmaceuticals
7th Annual Global Investor Conference
Opto Circuits India
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
OPTC IN
186
271
1.1
328/225
12/20/11
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(INR) GROWTH (%)
SALES EBITDA
03/10A
03/11A
03/12E
03/13E
10,776
15,856
22,442
25,843
2,452
3,661
3,958
4,937
13.2
19.6
21.2
26.5
55.0
49.3
8.1
24.7
20.6
13.8
12.8
10.2
4.8
3.7
3.1
2.6
33.9
30.4
25.9
26.9
28.5
24.1
19.6
21.0
4.8
3.6
2.7
2.3
14.1
12.8
10.6
8.6
Covering Analyst(s):
Nimish Desai
+91 22 3982 5406
NimishDesai@MotilalOswal.com
Key Takeaways
Guidance: Reiterates FY12 top-line growth of 40%
Opto Circuits' (OPTC) management reiterated its top-line growth guidance of 40% for
FY12. The growth will be partly driven by full-year consolidation of Cardiac Science
Corp (CSC). We estimate that net of CSC, the implied growth guidance for core revenue
is 20%. FY12 EBITDA margin guidance is 28% led by a turnaround in CSC operations
and we estimate capex of INR1.8b.
Management expects USD140m revenue, 10-12% EBITDA margin for CSC in
FY12
The management guidance is for flat ~USD140m revenue for CSC in FY12 since the
focus will be to improve CSC's profitability through internal restructuring. The
management guidance is for CSC's EBITDA margin of 10-12% in FY12, led by operational
consolidation of all the three US subsidiaries (CSC, Criticare and Mediaid), rationalization
of marketing spend and a reduction in the number of employees.
Invasive business to lead organic growth
The management expects 30% growth of the invasive business to be sustained in future.
This will be led by strong sales growth across product lines, the launch of new products,
expansion in emerging markets, greater acceptance for Dior and expansion in distribution.
Concerns include high debt, goodwill, deteriorating working capital
OPTC's total debt on the books is ~INR8.84b. The management guidance is not for debt
reduction in FY12. Goodwill stands at INR5.95b, ~45% of OPTC's net worth. The
management expects to take a one-time hit for goodwill after the implementation of
IFRS. Working capital cycle deteriorated in FY11 due to a shift of production from the
US to OPTC's Indian and Malaysian facilities. The management guidance is for a cut in
working capital requirement from FY13.
Valuation and view
OPTC delivered strong revenue, earnings growth and return ratios over the past few
years. Despite rapid growth OPTC is a marginal player in the global medical devices
industry, which gives it the opportunity to sustain its high revenue growth over the next
couple of years. However, an early financial turnaround of CSC, large goodwill and debt
on books along with high working capital requirements and very low free cash flow
generation are concerns. The stock trades at 12.8x FY12E and 10.2x FY13E EPS. Maintain
Neutral
with a target price of INR318 (12x FY13E EPS).
Amit Shah
+91 22 3982 5423
Amit.Shah@MotilalOswal.com
August 2011
93

Sector:
Pharmaceuticals
7th Annual Global Investor Conference
Sun Pharmaceutical Industries
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
SUNP IN
1,036
467
10.6
538/343
4/23/42
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/10A*
03/10A
03/11A
03/11A*
03/12E
03/13E
41,028
34,344
52,066
57,214
65,601
75,976
13,511
9,501
14,041
18,161
17,952
21,626
13.0
9.2
13.6
17.5
17.3
20.9
-25.7
47.8
34.4
27.9
20.5
35.8
34.5
26.6
27.0
22.4
6.2
5.1
4.5
3.9
12.8
16.2
17.7
18.5
18.7
22.9
20.5
22.2
10.9
7.8
6.6
5.5
32.9
22.6
20.9
16.8
* Including Para-IV/one-off upsides
Covering Analyst(s):
Nimish Desai
+91 22 3982 5406
NimishDesai@MotilalOswal.com
Key Takeaways
Guidance: 28-30% top-line growth in FY12
Sun Pharmaceutical Industries (SUNP) management reiterated its 28-30% top-line growth
guidance for FY12. The growth will be partly driven by the full-year consolidation of
Taro. We estimate that net of one-offs and Taro, implied growth guidance for core
revenue is 18-19%. Capex is estimated at INR4.5b, R&D expenses at 6% of sales and
management aims to file ~25 products with the US FDA.
Domestic formulations industry growth slowing
Growth in the domestic formulations industry has slowed over the past few months but
the management believes that long-term prospects are good. While the management
has not given any separate growth guidance for this business, we expect SUNP to
sustain its growth momentum. The business posted 17-18% CAGR over FY08-11 and
we expect SUNP to sustain this growth rate until FY13. Absence of contract manufacturing
revenue will temper FY12 growth.
Taro margins may not be sustained
While Taro reported strong EBITDA margins (~30%) over the past two quarters, the
management indicated that these margins were not sustainable due to a likely increase
in Taro's R&D expenses going forward and the possibility of increased competition for
some of Taro's products in the US.
Caraco: US FDA resolution likely to be gradual
While there is no fresh update on the US FDA resolution at Caraco, we believe that the
process will be gradual. We estimate part-recovery in Caraco's core US revenue from
FY13 based on the assumption that the US FDA issues will be resolved over the next few
quarters. SUNP recently raised its stake in Taro to 100%, which can incrementally help
in facilitating the resolution of US FDA issues.
Growth in emerging markets portfolio to be sustained
The management is confident of sustaining good growth in its emerging markets portfolio.
We estimate that SUNP's emerging markets will post 20% revenue CAGR over the next
two years, given its plans to increase penetration in key markets.
Valuation and view
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) launch
of controlled substances in the US. The stock is valued at 27x FY12E and 22.4x FY13E
core earnings. While we are positive about SUNP's business outlook, rich valuations
have tempered our bullishness. Maintain
Neutral
with a target price of INR524 (25x
FY13E EPS).
Amit Shah
+91 22 3982 5423
Amit.Shah@MotilalOswal.com
August 2011
94

Sector:
Real Estate
7th Annual Global Investor Conference
DLF
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
DLFU IN
1698
183
6.8
397/173
-11/-9/-34
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A
3/11A
3/12E
3/13E
74,209
95,606
100,896
107,824
17,300
16,396
16,269
19,288
10.2
9.7
9.6
11.4
-61.3
-5.2
-0.8
18.6
-
18.9
19.1
16.1
-
1.2
1.2
1.1
5.7
6.2
5.9
6.6
7.7
7.1
8.4
8.8
-
5.5
5.1
4.6
-
14.1
11.4
10.4
Covering Analyst(s):
Sandipan Pal
+91 22 3982 5436
Sandipan.Pal@MotilalOswal.com
Key Takeaways
Stronger guidance on divestment/deleveraging
The management hinted that a few major divestment negotiations would be concluded
over the next couple of months. Of its total de-leveraging target of INR100b over the
next three years, the company plans to reduce over INR30b in FY12.
DLF is in advanced stages of documentation for divestment of four assets of ~INR40b
(including Aman Resort), while the monetization of IT Parks in Noida and Pune
(expected valuation of INR12b-13b) has reached the final stages of conclusion.
DLF's underperformance with regard to its stated asset divestment plan over the
past one year has been a key overhang. However, the management portrayed greater
certainty following shift in control on divestment from asset level management to
core central management level.
Launch to gain traction in 2HFY12; "go slow" strategy in leasing
DLF has indicated ~2msf of new launches in 2QFY12 in Chandigarh (Panchkula and
Mulanpur). A larger portion of its new launches are planned for 2HFY12, including
premium-end project Magnolia-II in 4QFY12 (expected rate of INR17,000/sf).
The management maintained lower leasing guidance of 2.5-3msf and lower capex
plan, largely to leverage on the expected rental appreciation of 10-15%, going
forward. DLF expects rental income to grow to ~INR15b/INR18b in FY12/FY13.
Confident of victory in CCI issue; appealing against penalty
DLF has expressed extreme confidence in overcoming the recent INR6.3b penalty
imposed by Competition Commission of India (CCI) on account of the allegation of
misusing its dominant position in agreements with buyers in the Belaire project.
The management mentioned that DLF will appeal against the order with the Appellate
Forum of CCI. The company differs with the stated 'dominance position' status,
citing that DLF is one among 18 developers in Gurgaon.
Strong outlook barring a few markets; execution remains a key challenge.
DLF sees strong broadbased demand across locations, barring Noida (oversupply),
Mumbai (approval issue) and Hyderabad (political uncertainty). Monetization plan
of Mumbai property at status-quo due to problems in obtaining approvals.
Cost inflation, tightening liquidity, labor shortage and approval delays are major
headwinds against on-time execution.
Valuation and view
Meaningful progress in asset sales along with successful debt leveraging and
softening of borrowing cost would be the key catalyst for the stock. The stock trades
at 16.1x FY13E EPS, 1.1x FY13E BV, and at 40% discount to our NAV estimate.
Buy.
August 2011
95

Sector:
Real Estate
7th Annual Global Investor Conference
Jones Lang LaSalle
Covering Analyst(s):
Sandipan Pal
+91 22 3982 5436
Sandipan.Pal@MotilalOswal.com
Key Takeaways
Long term macro story intact amid headwinds; JLL expects demand for industry
regulator to gain ground
Strong outlook of Indian economy with real GDP growth rate of 8-8.5% over the
next five years is the biggest demand driver of the real estate sector in India.
The staggering growth potential is also evident from the fact that the value of
investments made in real estate under construction crossed USD100b, ~66% devoted
to the residential vertical, ~25% to the commercial and rest to the retail vertical.
However there are operational and regulatory hurdles such as (a) infrastructure
delays, (b) cost inflation, (c) lack of mechanization and skilled labor to support
timely execution of plans, (c) absence of proper regulatory framework, and (d)
spiraling liquidity pressure. Apathy among government and institutional lenders and
delayed approvals have been other recent headwinds.
Residential sales, new launches slow; no major price correction expected

Rising residential property prices led to the stabilization of overall absorption rates
from 17.5% in 1QFY11 to 14.6% in 2QFY11. With several delays in approval and
plummeting sales, the momentum in new launches has also declined, with Chennai
being the only city to register a rise in new launches in 2QFY11.
Pune and NCR-Delhi led cities in terms of absorption rate recorded in 2QFY11,
followed by Chennai and Kolkata. Mumbai recorded the lowest absorption rate.
Key metros are unlikely to witness a major price correction. Buyer interest will
resume in Mumbai with moderate price correction for a brief period.
Commercial revival evident in metros; Occupier's market on supply overhang
Demand of office space is gradually improving with opportunistic tenants taking up
space at lower rentals. Net absorption to grow from 31msf in 2010, to 36msf and
41msf in 2011 and 2012. CBDs of key metros witnessed moderate rental up-tick.
Despite improving demand, vacancies are rising in the short term due to infusion of
office space, indicating ~50msf of unsold stock by the end of 2011. The vacancy is
expected to rise to 22.9% by the end of 2012 and then fall in 2013. NCR and Mumbai
will witness maximum supply, while Bangalore will witness lowest vacancy of 13%.
The IT/ITES sector is the biggest demand driver followed by the manufacturing and
BFSI sectors, which together account for 60-70% of office demand.
The recorded spread of 70-80bp between rental yields in CBDs and those of SBDs
and suburbs exists due to risks of a huge supply overhang expected in secondary
and suburban locations.
Oversupply, poor planning, inferior location lead to higher vacancies
Inferior floor planning, poor execution and location choice resulted in a dearth of
quality supply in the retail space. Therefore, while absorption has picked up in city-
centric, well executed projects, a supply overhang will keep its natural vacancy
level under pressure at over 25%.
Annual absorption is expected to increase to 12msf (4.7msf absorbed in 1H11 and
another 4.2msf pre-committed) against 4msf in 2010.
Supply is expected to witness strong rationalization after 2013 with several developers
planning to exit the retail vertical due to the complexity of execution and management.
August 2011
96

Sector:
Retailing
7th Annual Global Investor Conference
Pantaloon Retail India
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
PF IN
201
283
1.2
528/218
-2/16/-27
YEAR
END
NET SALES
(INR B)
PAT
(INR B)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(INR) GROWTH (%)
SALES EBITDA
06/10A
06/11E
06/12E
06/13E
89,261
112,459
140,139
167,511
1,680
1,909
2,773
3,589
8.2
8.8
12.4
16.1
25.8
7.8
41.1
29.4
34.7
32.2
22.8
17.6
2.1
1.9
1.8
1.6
6.0
5.8
7.9
9.3
14.2
13.4
15.3
16.4
0.9
0.8
0.6
0.6
9.6
8.9
7.4
6.4
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Key Takeaways
PF expects ~30% sales CAGR over FY11-13 led by 14-15% SSS growth, space
addition
Harit Kapoor
+91 22 3029 5120
Harit.Kapoor@MotilalOswal.com
Pantaloon Retail (PF) expects to deliver ~30% growth over the next two years led
by 14-15% same-store-sales growth and by space addition. However FY12 growth
may be lower than 30%.
Lack of quality real estate will be a key issue in future, which PF plans to address by
aggressively expanding. It plans to add 2-2.5msf of space a year over the next 3-4
years.
Demand environment improves marginally MoM; 2HFY12 to be better than
1HFY12
After a 16-17% price increase in apparel taken in April, consumer demand has
been weak in April and May. However there was marginal improvement in June and
July and the management expects demand to be back on track in 2HFY12.
GST is likely to be a major boost for organized retail with likely saving of 20% on
supply chain cost, if implemented in the true spirit.
PF to cut inventory by 6-7 days; Monetizing non-core retail assets, FDI in
retail to help cut debt
Inventory reduction targets were not met in FY11 because of high cost apparel
inventory. The management aims to cut inventory to 100 days in FY12 and by 6-7
days a year thereafter. The target is 65 days.
PF had debt of ~INR40b at the end of FY11 in the core retail business, ~55% of
which was towards the value retail business. Current debt equity is 1.1x. PF plans to
cut this to 0.75x by monetizing its financial services business (possibly Future Capital)
and benefiting from an impending FDI in retail legislation.
The management however stated that the book value of non-core investments was
USD800m-1b some of which will be monetized within the next 12 months.
Capex of INR8b for space addition, store refurbishment
Space addition of 2-2.5msf and refurbishments of 8-9 year old stores will require
capex of INR8b in FY12, 60% of which will be funded through internal accrual.
Investment in the financial services business continues to be a drag. INR2b outflow
will be required to fund the businesses from PF's balance sheet.
Valuation and view
We believe PF is the best play on retail in India with a strong reach across formats
and will be the biggest beneficiary of FDI in retail in India. However, surging debt,
high inventory and continued investment in financial services are key concerns.
We estimate 35% EPS CAGR over FY11-FY13. The stock trades at 22.8xFY12E EPS
of INR12.4 and 17.6xFY12E EPS of INR16.1x. Maintain
Buy.
August 2011
97

Sector:
Retailing
7th Annual Global Investor Conference
Shoppers Stop
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
SHOP IN
82
395
0.7
504/261
-3/31/25
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
EPS
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
(INR) GROWTH (%)
SALES EBITDA
03/10A 13,989
03/11A/E17,120
03/12E 20,625
03/13E 25,276
418
751
972
1,259
4.2
9.2
11.8
15.3
174.6
120.3
29.3
29.6
94.9
48.4
33.3
25.7
10.5
5.5
4.8
4.2
13.5
11.3
14.5
16.4
14.8
13.8
17.6
21.5
2.4
1.9
1.5
1.2
31.7
21.9
16.0
12.5
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Key Takeaways
Consumption sentiment remains positive; expects LTL sales growth of 8-10%
Consumer sentiment remains positive though there has been some deterioration in
the past few months, mainly led by various scams and high inflation.
Harit Kapoor
+91 22 3029 5120
Harit.Kapoor@MotilalOswal.com
Shoppers Stop (SHOP) has seen lower LTL sales growth of 7% in 1QFY12, with
volume decline of 5% and customer entry growth of only 3%. The management
expects to sustain 8-10% LTL sales CAGR.
SHOP believes that its model is scalable in 35 cities, as against its current presence
in 19 cities. Though store additions in same cities will result in some cannibalization
in the near term, this will enable economies of scale and help increase margins.
Incremental investments largely in well-established core portfolio
SHOP has launched four stores in FY12, and plans to end the year with the addition
of 10 stores. It would also look at adding 15-20 specialty stores like EL and MAC.
The company has largely used the funds raised from QIP. It is confident that standalone
operations would be able to fund growth in the near term.
Margins are likely to remain around current levels in the near term; however, GST,
lower store openings and lower import duty on beauty products will boost margins
in the medium term.
FDI in retail will not impact the departmental store format, as departmental store
chains have less global character.
Hypercity to turn EBITDA positive by FY13
Hypercity is likely to close the year with 12 stores (10 currently), with likely addition
of ~4 stores every year. The management is confident of making it EBITDA positive
by FY13.
Stores in tier-2 cities like Amritsar and Ludhiana are performing below expectations,
while the one in Jaipur has started improving. The management plans to add another
couple of stores in the Mumbai region by end of FY12.
The proportion of food and grocery has increased to 61% of sales from 55% a year
ago, which has impacted profitability. The management intends to increase sales of
apparel and general merchandise to enhance profit margins.
Valuation and view
SHOP plans to increase retail space at a fast clip across formats. Decline in LTL
sales growth in Shoppers Stop and increasing loss in Hypercity Retail are key
headwinds.
SHOP is one of the best plays on rising consumerism in Urban India. However, the
stock trades at 33.3x FY12E EPS of INR11.8 and 25.7x FY13E EPS of INR15.3.
Neutral.
August 2011
98

Sector:
Retailing
7th Annual Global Investor Conference
Titan Industries
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
TTAN IN
888
203
3.9
238/144
4/28/53
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/10A 46,744
03/11A 65,209
03/12E 90,202
03/13E 108,515
2,615
4,336
6,401
8,267
2.9
4.9
7.2
9.3
24.7
65.8
47.6
29.2
-
46.7
28.2
21.8
-
17.6
12.3
8.9
41.0
49.6
51.4
47.2
53.6
61.8
65.1
59.0
-
2.6
1.8
1.5
-
29.0
20.1
15.2
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Key Takeaways
Consumer demand environment outlook cautious in the near term
The demand environment is likely to be robust in the medium to long term, given
rising income levels and rise of the urban middle class.
However, the management believes that growth outlook in the near term may get
impacted by rising interest rates and likely dampening of consumer sentiment.
Harit Kapoor
+91 22 3029 5120
Harit.Kapoor@MotilalOswal.com
Jewelry: Volume growth lower than 1Q; margins to sustain at FY11 levels
The management believes that volume growth of 35% in 1QFY12 unsustainable,
though there is no indication of a major slowdown in July and August.
PAN card requirement for jewelry purchase above INR0.5m (15-20% of sales) has
no impact on demand and sales.
Tanishq currently has 121 stores and plans to add 10 new stores in FY12.
Although the jewelry segment has reported 120bp YoY increase in margins in 1QFY12,
it would be difficult to increase margins beyond FY11 levels.
Watches: Stable growth; margins to be impacted by losses on Helios stores
Though watch volumes have been stable through July and August, the watch business
is more prone to lower growth if consumer sentiment is impacted.
Large format watch stores have witnessed a 26% LTL growth in 1QFY12. Premium
brands like Titan and Fastrack are growing faster, resulting in richer sales mix.
Helios is a focus area, as TTAN plans to take store count to 40 by end-FY12 (9 in
June 2011) and to 100 in two years. This will enable TTAN to capture the growing
demand for high-end luxury watches.
TTAN is positive on Fastrack as a brand and believes it has strong potential in
watches, eyewear and other accessories. It plans to triple revenue in three years.
Eyewear and Precision Engineering: Eye Plus the new growth driver
Eyewear has posted an impressive 70% SSS growth in 1QFY12 and the management
is very positive on growth. It has so far added 27 stores during the year (total 177
stores) and plans to increase the number of stores to 250 by FY12.
Store breakeven for eyewear is expected at 300 stores in FY13.
TTAN plans to end the current year with sales exceeding INR1b for precision
engineering, with positive bottomline contribution.
Valuation and view
TTAN remains one of the best plays on increasing consumer discretionary spends.
However, near-term outlook remains cautious due to high inflation, sharp increase
in gold and diamond prices, and Helios store expansion.
The stock trades at rich valuations of 28.2x FY12E EPS of INR7.2 and 21.8x FY13E
EPS of INR9.3.
Neutral.
August 2011
99

Sector:
Telecom
7th Annual Global Investor Conference
Bharti Airtel
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
BHARTI IN
3798
394
32.7
445/304
9/30/38
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A
3/11A
3/12E
3/13E
418,472
594,672
725,120
89,767
60,468
78,339
23.7
15.9
20.6
30.6
5.9
-32.6
29.6
48.4
16.6
24.7
19.1
12.9
3.3
2.9
2.5
2.1
23.6
12.6
14.1
18.0
18.9
8.7
8.8
11.7
3.6
3.5
2.8
2.3
9.1
10.5
7.7
5.9
818,592 116,236
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
Key Takeaways
Recent tariff hikes to get reflected in four quarters
Recent tariff hikes have largely been driven by increasing costs and required
investments in 3G and rural networks.
The hikes will flow through over four quarters.
Tariffs would be reviewed to assess the impact on market share and volumes.
The recent hikes in some 2G data plans are mainly to benchmark them with the
recently introduced 3G data plans.
Upcoming policy to provide level playing field
License renewal and excess spectrum are the two major regulatory issues.
While NTP 2011 is keenly awaited for long-term regulatory visibility, it is also expected
to provide a level playing field for all operators.
Revenue market share: Has managed well despite hyper competition
Bharti has lost ~2% revenue market share over the last two years.
This is mainly a function of large players like Vodafone and Idea entering new
markets.
Huge opportunity in 3G
Overall voice penetration currently stands at ~50% and could increase, largely driven
by increasing rural penetration (currently at ~30%).
Potential 3G user penetration is a large sub-set of voice penetration. The potential
for data usage is very large, given that there are no fixed lines and broadband
penetration is less than 2%. However, this would require an application ecosystem,
rollouts and 3G-enabled handsets at affordable prices.
Non-3G handsets are likely to be driven out of the market over the next two years.
Africa: Cost reduction a key focus area
Primary focus for Bharti in Africa is to reduce cost per minute.
Regulatory and competitive environment is favorable in Africa.
Bharti is keen to invest and expand its business in Africa at a fast pace but has faced
some logistics challenges, which will keep FY12 capex at USD1.2b.
Valuation and view
The stock trades at proportionate EV/EBITDA of 7.7x FY12E and 5.9x FY13E.
Buy
with a
target price of INR530.
August 2011
100

Sector:
Telecom
7th Annual Global Investor Conference
IDEA
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52 W Range (INR)
1, 6, 12 Rel Per
IDEA IN
3,303.3
93
6.7
100/56
21/56/4
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A 124,476
3/11A 155,032
3/12E
3/13E
198,782
243,714
9,540
8,986
8,560
22,432
3.1
2.7
2.6
6.8
2.0
-11.6
-4.7
162.0
-
34.0
35.7
13.6
-
2.5
2.3
2.0
7.6
7.6
6.7
15.7
5.5
5.2
6.1
10.9
-
2.7
2.2
1.7
-
10.8
7.9
5.5
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
Key Takeaways
Significant growth opportunity in voice as well as data
Penetration of voice services in India is still relatively low at ~50% v/s the global
benchmark of 80-90%.
Data opportunity could be as large as voice over the next few years.
Share of non-voice services in revenue is set to increase, as subscribers upgrade
handsets over the next few years and the ecosystem for 3G develops.
Most global companies derive 30-50% of revenue from data v/s ~3% for India.
Key industry trends
Virtual consolidation in the industry is evident from increase in revenue market
share of top-three operators from ~55% to ~65% in the last 3-4 years despite
hyper-competition.
While incremental operating cost for 3G is only a fraction of current operating costs,
amortization and finance costs related to 3G spectrum will negatively impact the
bottomline of all operators.
Overinvestment strategy in established circles
Idea has a strategy of overinvesting in its established circles, which drives its
leadership. It is focused on deepening its coverage and driving rural growth. 67% of
net subscriber additions for Idea come from rural markets.
Focus on building scale; with 1.2b minutes/day, Idea is the eighth-largest operator
globally in terms of traffic.
Enhancing revenue market share driven by (1) focus on quality of subscribers, (2)
cash profits to sustain investments, and (3) higher-than-industry traffic growth.
Idea is expanding its 3G reach and is rolling out 3G services in 10 towns/day, as
significant growth is expected from wireless broadband on the handsets.
New circle losses likely to continue at current levels
During FY11, Idea had incurred an EBITDA loss of INR5.4b in its nine new circles.
The loss is likely to remain at similar levels in the near-term, as the company would
keep investing more as economics in these circles improve.
Regulatory issues
NTP 2011 would be a key event to watch for.
Continued overcapacity in the industry remains a challenge.
Potential exit of unviable operators could be an important milestone for the industry.
Valuation and view
The stock trades at EV/EBITDA of 7.9x FY12E and 5.5x FY13E.
Buy
with a target price of
INR140.
August 2011
101

Sector:
Telecom
7th Annual Global Investor Conference
Reliance Communications
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
RCOM IN
2064
79
3.6
189/73
-3/-7/-40
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A 222,457
3/11A 205,627
3/12E
3/13E
206,274
231,742
48,812
14,936
10,609
18,238
23.7
7.2
5.1
8.8
-20.7
-69.4
-29.0
71.9
-
10.9
15.3
8.9
-
0.4
0.4
0.4
12.6
3.9
2.9
4.8
5.8
2.9
2.7
4.0
-
2.3
2.2
1.8
-
7.4
6.7
5.1
Covering Analyst(s):
Shobhit Khare
+91 22 3982 5428
Shobhit.Khare@MotilalOswal.com
Key Takeaways
Competitive environment improving
The worst of the competitive intensity is behind the sector.
With tariff hikes taken by operators controlling 80-90% of the revenue market, the
pricing environment has improved.
Voice RPM improvement will be driven by recent tariff hikes flowing through to more
subscriptions as they come up for renewal.
Advanced due diligence for tower company sale underway
The tower company transaction is in an advanced due diligence stage and could be
completed over the next 2-3 months. Media reports indicated a potential valuation
of USD5b for the tower assets.
The sale will involve the transfer of Reliance Communications' (RCom) tower assets.
Optic fiber assets will not be a part of the proposed transaction.
Leverage high
RCom has net debt of ~INR320b and the blended cost of debt is less than 5%.
The only major debt re-payment required over the next one year is related to the
outstanding FCCB (~USD1.1b due in May 2011).
RCom has drawn down ~USD1.3b from China Development Bank to re-finance short-
term rupee loans related to 3G license fees. A further limit of ~USD0.6b is available.
Beside external capital raising, operating FCF should be healthy given expected
FY12 EBITDA of ~INR68b and limited capex requirement of ~INR15b.
Huge untapped data opportunity
With a large disparity between voice penetration (60-65%) and broadband
penetration (1-2%), there is significant opportunity in the data business yet to be
tapped.
The 3G customer base is ~2m. RCom has launched a tablet (priced INR12,999,
manufactured by ZTE). As the prices fall, data penetration should reach a threshold
level.
Valuation and view
RCom trades at EV/EBITDA of 6.7x FY12E and 5.1x FY13E. We have a
Neutral
rating with a target price of INR83.
August 2011
102

Sector:
Utilities
7th Annual Global Investor Conference
Aryan Coal
Covering Analyst(s):
Nalin Bhatt
+91 22 3982 5429
NalinBhatt@MotilalOswal.com
Key Takeaways
ACB to boost coal washing capacity to 102mt by FY15
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
A new policy putting restrictions on the ash content in coal to less than 34% is
expected to boost coal washing in India.
Washed coal saves costs of transport and increases thermal coal efficiency.
Over the years coal washing capacity has been in deficit and the Planning Commission
estimates coal washing demand of 502mt from the power sector.
ACB, formerly known as Aryan Coal Benefications, has coal washing capacity of
65mt and is working to expand its capacity by 37.3mt. It plans to have a CAGR of
~16% to 102mt over the next three years with the commissioning of its project.
Backward integration strategy by way of equipment manufacturing
In sync with its backward integration strategy, ACB fabricates clean coal equipment
including barrel washers and has installed capacity of 1,500tpa.
Increased demand to set up more coal washeries would provide a strong domestic
growth opportunity.
Sponge iron capacity ~0.2mt a year
ACB has sponge iron capacity of 165k tons a year and captive power capacity of
18MW.
Power generation capacity synergized by washery rejects
ACB entered the power generation industry and has operational capacity of 63MW
(15MW wind, 30MW thermal plant based on coal rejects and 18MW on the waste
heat recovery mechanism).
ACB highlighted its coal washery generates 20-30% of reject, which in a coal deficit
scenario, can help to generate power. This would provide continued supply of fuel
to the projects.
The company has 400MW of power projects (based on a mix of coal and washery
rejects) under construction with EPC and financial closure in place. It plans to
commission the projects over FY12 and FY13.
ACB is also working on ~3.7GW of thermal power projects.
Development status of ~3.7GW of projects
Project
Chhattisgarh
Sidhi
Champa
Ratija
Bandakhar
Kakinada
Capacity (MW)
600
1200
1200
50
300
350
CoD
3QFY14
3QFY15
1QFY17
4QFY14
1QFY14
2QFY14
Remarks
-
-
-
-
-
-
-
-
-
-
-
-
Financial Closure achieved
NIT invited for BTG
Financial Closure achieved
NIT invited for BTG
Water allocation approved
RFP/RFQ for EPC under preparation
Land acquired, EIA report submitted
Land, water, EC allocation in place
NIT invited for BTG
Land, water, EC allocation in place
Financial Closure achieved
NIT invited for BTG
August 2011
103

Sector:
Utilities
7th Annual Global Investor Conference
CESC
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
CESC IN
125
297
0.8
433/257
2/9/-15
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
GR. (%)
P/E*
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/10A 32,928
03/11A 39,399
03/12E 42,103
03/13E 45,041
4,333
4,670
5,040
5,262
34.5
38.9
40.1
41.9
17.7
12.7
3.2
4.4
-
7.6
7.4
7.1
-
0.9
0.8
0.7
11.4
11.4
10.6
10.1
10.3
11.2
11.0
10.7
-
1.5
1.2
1.2
-
5.9
4.9
5.0
*Standalone
Covering Analyst(s):
Nalin Bhatt
+91 22 3982 5429
NalinBhatt@MotilalOswal.com
Key Takeaways
Fuel cost already approved, revised tariff petition pending approval
CESC has already got the approval to pass on the fuel price increase effected by
Coal India and has raised its tariffs by INR0.46/unit.
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
It has filed the year-end tariff petition for FY12, where it seeks an increase of
~INR0.6/unit. The final outcome of this petition is awaited.
1.2GW under construction projects on track, development pipeline of 5.3GW
The 600MW Haldia project has received debt sanctions. The project cost, including
~80km of transmission corridor, stands at INR33b. 70% of its fuel requirement will
be met through linkages (granted from MCL) and 30% through coal imports from
Resource Generation.
450MW of the Haldia project capacity will be sold to its own distribution business,
for which CESC has received approval from the state regulator.
600MW Chandrapur project, the total cost is estimated at INR30b (including premium
paid for acquisition). Construction work is in full swing, with major orders in place.
CESC plans to sell ~300MW of power from the Chandrapur project through Case-1
bids on LT basis, while the balance capacity can be sold to SEZ industrial consumers,
or group company (engaged in distribution of power in Noida / Greater Noida).
Resource Generation stake
CESC has recently acquired 11.8% equity interest in Resource Generation (an
Australian company with mining interests in South Africa). This will entitle CESC to
procure 139m tons of coal over 38 years.
Depending on the future development, CESC could increase stake in the venture,
but not beyond 20%.
Cash infusion of INR1.5b in Spencers in each of FY12 and FY13
Improvement in gross margins and reduction in operational losses led to lowering
of Spencer losses to INR1.7b in FY11. CESC expects the losses to further go down
to INR1b in FY12.
Apart from funding losses, Spencer will require capex of INR0.4b and INR0.5b for
planned addition of 0.3msf and 0.5msf of area in FY12 and FY13 respectively.
Sales for its retail operations improved to INR1,042/sf in 1QFY12, and further to
INR1,100/sf in July 2011.
Valuation and view
We expect CESC to report a net profit of INR5b (up 3%) in FY12 and INR5.3b (up 4%) in
FY13. The stock trades at 7.4x FY12E and 7.1x FY13E EPS.
Buy.
August 2011
104

Sector:
Utilities
7th Annual Global Investor Conference
NTPC
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
NTPC IN
8245
175
31.5
222/165
8/10/2
YEAR
END *
NET SALES
(INR M)
PAT *
(INR M)
EPS*
(INR)
EPS
GR. (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
03/10A
03/11A
03/12E
03/13E
463,226
567,145
590,921
84,540
79,580
87,952
10.3
9.7
10.7
12.7
4.7
-5.9
10.5
18.6
-
18.0
16.3
13.7
-
2.1
2.0
1.8
14.1
12.2
12.5
13.7
14.1
12.2
12.5
13.7
-
0.3
0.4
0.6
-
12.1
11.7
11.2
653,059 104,311
* Pre Exceptional Earnings; We have factored in ROE gross-up based on MAT wef FY11 onwards
Covering Analyst(s):
Nalin Bhatt
+91 22 3982 5429
NalinBhatt@MotilalOswal.com
Key Takeaways
Capacity addition to accelerate, 14GW expected over FY12-14
NTPC expects to accelerate capacity addition, adding 14GW over FY12-14 against
capacity addition of 10.4GW over FY06-11.
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
Targeted capacity addition of 5GW a year from FY12 until 2032 against ~1GW over
the past 35 years.
The FY12 capacity addition target is maintained at ~4.3GW (including the 500MW
Mauda project on a best effort basis. NTPC incurred ~65% capex for projects targeted
for commissioning in FY12, providing higher visibility.
Fuel sourcing: Comfortably placed in FY12, working on LT strategy
In FY12, NTPC plans to meet its need for 135mt of fuel supply from domestic long
term linkages, 23mt through imports (actual at 14mt) and 5mt through the bi-
lateral route, implying ~14% blending.
The management is hopeful of a revocation of mine de-allocation, given the
substantial progress made. A mine developer and operator (MDO) for Pakri Barawidh
and Talaipalli mines has been appointed and NTPC is in advanced stages of
development of the Kerandari mines. NTPC expects to produce 2.3mt of coal from
its captive mines in FY13 and 47mt by FY17.
NTPC indicated the possibility of more mines being allocated to it given its progress
in developing its mines has been better than the average time taken for mine
development.
NTPC signed an agreement with Jindal ITF to set up an inland waterways transport
system (IWTS). The MoU was signed in August and the system will become
operational in 15 months' time. This will solve coal supply logistics issues at its
Farakka and Kahalgaon projects.
Twelfth Plan capacity addition 25GW+, bouquet of projects offers flexibility
NTPC plans to have installed capacity of 128GW by FY32 and commission 26GW in
Twelfth Plan. The management indicated that 6GW of bulk tendering, which is sub-
judice would not impact its Twelfth Plan capacity addition plans, as NTPC is working
on several projects and a slippage in one could be offset by other projects particularly
brownfield expansion.
NTPC's 60GW project portfolio provides visibility on targets for capacity addition
until FY17.
Valuation and view
We expect NTPC to report net profit of INR88b (up 11% YoY) in FY12 and INR104b
in FY13 (up 19% YoY). The stock quotes at a PER of 16x FY12E and 14x FY13E. P/BV
is 2.0x FY12E and 1.8x FY13E. Maintain
Buy.
105
August 2011

Sector:
Utilities
7th Annual Global Investor Conference
Reliance Infrastructure
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
RELI IN
265
453
2.6
1134/403
-9/-16/-46
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS*
(INR)
EPS
GR. (%)
P/E*
RATIO
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A 100,273
3/11A
3/12E
3/13E
96,146
141,945
164,832
10,617
10,809
12,031
14,416
39.6
40.3
44.9
53.7
16.9
1.8
11.3
19.8
11.5
11.2
10.1
8.4
0.8
0.7
0.7
0.6
8.2
6.8
6.8
7.7
8.2
7.0
8.1
8.8
0.5
0.8
0.5
0.4
4.6
6.4
4.8
3.6
*Standalone
Covering Analyst(s):
Nalin Bhatt
+91 22 3982 5429
NalinBhatt@MotilalOswal.com
Key Takeaways
Mumbai distribution business overhang addressed
MERC has renewed a Reliance Infrastructure (RELI) license to supply power in
Mumbai for 25 years. Consequently, visibility over regulated PAT of INR3.5b a year
Satyam Agarwal
+91 22 3982 5410
AgarwalS@MotilalOswal.com
has increased.
MERC has allowed cumulative recovery of INR23b. Under recovery on the books
was due to a tariff stay earlier, cross-subsidy surcharge borne due to migrating
customers (INR3.5b) and cost escalation/fuel cost pass throughs.
RELI has invited long term bids of 1,000MW of power from April 2016 and has
initiated RFP. For medium term bids, the average cost is expected to be below
INR4.5/unit.
Infrastructure investment INR49b, six projects already operational, six
expected in FY12
RELI invested INR49b in its infrastructure portfolio and commissioned six infrastructure
projects, comprising four roads, one metro and one transmission project.
The management said its profits from infrastructure were likely to get a boost in
FY12 with the commissioning of six more projects.
RELI adopted a strategy of incurring more upfront equity payment in infrastructure
projects to overcome the negative impact of an elevated interest rates scenario.
We understand ECB raised against metro, transmission projects (at 6-6.5%) will
help to lower interest costs.
RELI sold 20% of its 12,000sq meter property in Delhi for an attractive price of
INR600/sqft/month.
Strong EPC order book of INR280b
EPC division order book was INR280b (book-to-bill ratio of 8x), providing strong
visibility on EPC revenue over 3-4 years.
The management guidance is for EBITDA margin of 8-10% for the division and
revenue growth is expected to be 60%+.
Manpower in the EPC division is 1,600 and RELI has developed in-house competence
to execute power, roads and metros and is adding infrastructure projects such as
airports and ports.
Valuations and view
We expect RELI to post net profit of INR12b in FY12 (up 11% YoY), and INR14.4b in
FY13 (up 20% YoY).
At a CMP, the stock quotes at PER of 10x FY12E and 8x FY13E.
Buy.
August 2011
106

Sector:
Others
7th Annual Global Investor Conference
Jain Irrigation Systems
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
JI IN
386
166
1.4
258/129
10/-9/-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
03/08A
03/09A
03/10A
03/11A
22,159
28,584
34,200
41,634
1,224
1,742
1,901
2,688
3.4
4.5
5.0
7.0
52.2
32.9
10.7
39.3
-
36.8
33.2
23.8
-
6.6
5.1
4.1
14.0
19.3
15.2
15.6
13.5
15.7
13.1
15.2
-
3.3
2.7
2.2
-
16.3
14.8
11.8
Covering Analyst(s):
Amnish Aggarwal
+91 22 3982 5404
AmnishAggarwal@MotilalOswal.com
Key Takeaways
MIS the key growth driver; backend advantage gives competitive edge
Harit Kapoor
+91 22 3029 5120
Harit.Kapoor@MotilalOswal.com
The micro irrigation systems (MIS; 50% of revenue) division continues to post robust
growth, achieving 31.5% revenue growth in 1QFY12. The management expects
similar growth through the year, led by strong demand in its seven key states.
Though new players are looking to enter the MIS space (M&M, Godrej Agrovet),
Jain Irrigation (JI) has a major competitive advantage in terms of complete backward
integration and strong distribution. JI has 55% market share and currently makes
double the margins of the nearest competitor in MIS.
Domestic margins to improve, owing to higher share of MIS and food processing
Domestic margins expanded 140bp to 23.5% in 1QFY12 due to higher share of MIS
and food processing in the total mix which enjoy higher margins.
Margins are likely to be under pressure in piping and PVC (30% of sales) due to
higher input costs. However, the management expects these businesses to grow at
half the rate as compared to MIS and food processing. Hence, overall domestic
margins in FY12 are likely to be higher than in FY11.
MIS receivables improving; NBFC to reduce balance sheet burden in FY13
In 1QFY12, gross MIS receivables improved 20 days QoQ to 349 days. The
management expects another 40-50 days of improvement by the end of 3QFY12,
led by subsidy payment dispatch from the Maharashtra government.
JI expects to get the NBFC license in 3-4 months, which will reduce JI's debt and
receivables burden. The total equity funding required will be INR2b, of which INR1b
will come from JI, which will initially own 49% stake. JI believes that all MIS players
will take the NBFC route; EPC Industrie (M&M's subsidiary) has an NBFC and Netafim
(second largest player in India) has also applied for an NBFC license.
International: Strong growth in new geographies; double-digit margin target
JI introduced its MIS products in Turkey last year and generated revenue of USD10m;
the company plans to increase revenue to USD25m in this market in FY12.
JI's international subsidiaries posted an EBITDA margin of 5-6% in FY11. With
increasing sales of MIS in new geographies and access to the UK market through its
Sleaford acquisition, JI is targeting double-digit margins over the next few years.
Valuation and view
JI continues to benefit from increasing demand for its MIS products and its strong
competitive advantage. The key factors to watch are balance sheet management
August 2011
and successful business de-risking through the NBFC.
The stock trades at 24x FY11 consolidated EPS of INR7.4.
Not Rated.
107

Sector:
Others
7th Annual Global Investor Conference
Raymond
Bloomberg
Equity Shares (m)
CMP (INR)
Mcap (USD b)
52-Wk Range (INR)
1, 6, 12 Rel Perf (%)
RW IN
61
348
0.5
458/245
0/32/6
YEAR
END
NET SALES
(INR M)
PAT
(INR M)
EPS
(INR)
EPS
YOY (%)
P/E
(X)
P/BV
(X)
ROE
(%)
ROCE
(%)
EV/
EV/
SALES EBITDA
3/10A
3/11A
25,410
30,671
366
2,589
6.0
42.2
L to P
608.3
-
8.2
-
1.7
3.1
21.2
3.9
9.8
-
1.2
-
8.4
Key Takeaways
Strong demand growth to continue in key segments
Covering Analyst(s):
Sandipan Pal
+91 22 3982 5436
Sandipan.Pal@MotilalOswal.com
Both Raymond's (RW) fabric business (48% of FY11 revenue) and the branded
apparel business (25% of FY11 revenue) are set to gain from the exponential increase
in its retail presence in the recent past (added 500 stores over the past 2.5 years)
and the planned opening of 100 more stores in FY12. The management sounded
upbeat about demand in new locations (tier-3, 4, and 5 towns).
The worsted fabric business has been able to deal very well with raw material price
hikes (~50% YoY and ~28% QoQ) by blending of RM. In the branded apparel business
RW raised prices. RW's ability to withstand such pressure without hurting margins
and clocking 24% YoY volume growth in its key segment (worsted fabric) reasserts
its brand value.
Operating efficiencies to continue in FY12
The closure of the Thane plant resulted in significant savings in 1QFY12. These
savings will continue to accrue in the remaining quarters, increasing margins.
The raw material prices, especially wool continue to remain at elevated levels which
continue to remain a matter of concern. However, the new wool clippings expected
in October are expected to lead to price correction.
The company is in the process of transferring the 7 mn meters of capacity from
Thane to Jalgaon that will help the company to further accelerate its production.
Focused player with a clear business strategy
Raymond is now concentrating only on four brands in its branded apparel segement
i.e Raymond Premium apparel, Park Avenue, Parx and Colorplus and has removed
its presence in the children wear segment.
The company has guided for a capex of INR2b, largely towards moving of Thane
plant and machinery to Jalgaon, retail expansion and capacity expansion in the
engineering and auto component businesses and other routine capex.
Meaningful clarity is yet to emerge on monetization of RW's land bank (120 acres)
in Thane (post shifting of its factory to Jalgaon). The management is considering all
routes of monetization including sale, partial sale and joint development.
Valuation and view
RW looks set for 20-25% growth in revenue and sustained/improving margins over the
next two years. The stock trades at 7.3x and 13.3x FY12E EV/EBITDA and PER respectively
and 6.5x and 11x FY13E EV/EBITDA and PER consensus earnings estimates respectively.
August 2011
108

7th Annual Global Investor Conference
Notes
August 2011
109

7th Annual Global Investor Conference
Notes
August 2011
110

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Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S.,
Motilal Oswal has entered into a chaperoning agreement with a U.S. registered broker-dealer, Marco Polo Securities Inc. ("Marco Polo").
This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional
investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major
institutional investors and will be engaged in only with major institutional investors.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, Marco
Polo and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.
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