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Date : 30th June 2011


BUY LUPIN CMP : 448; Target : 510 in 6 months Headquartered in Mumbai, India, Lupin Limited today is an innovation led transnational pharmaceutical company producing a wide range of quality, affordable generic and branded formulations and APIs for over 70 countries in the world. Lupin remains amongst the prolific R& D spenders in the industry which we believe bodes well for its growth. Lupin can turn out to be a major winner with the recent Japanese crisis by tapping the opportunity. The Japanese subsidiary Kyowa pharma to see rise sale of CNS drugs and anti-infective grew by 16% to Rs. 1,727 Mn during Q3, FY 2010-11 which has 200 brands and adds 11% -12 % revenue to the company. Kyowa also plans to launch atleast 4 5 products every year. Lupin remains the 5th largest Generic player in the U.S. in terms of prescriptions (IMS Health). Lupin emerged as the market leader (No. 1 by market share) in 13 out of 29 generic products in the U.S. and 28 out of these 29 generic products rank in the Top 3 positions by market share Key Financial & Performance Highlights- FY 2010-2011 Net sales grew by 20% to Rs. 57,068 Mn. during FY 2010-11, up from Rs. 47,736 Mn. (FY 200910) Net profits grew by 27% to Rs. 8,626 Mn. during FY 2010-11, as compared to Rs 6,816 Mn. (FY 2009-10) Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) grew by 20% to Rs. 12,000 Mn. during FY 2010-11, from Rs. 9,981 Mn. (FY 2009-10) Debt Equity Ratio improved to 0.22 as on 31st March, 2011 from 0.37 as on 31st March, 2010 Key Highlights Q4, FY 2010-11 Net sales growth for Q4 FY 2010-11 was 18% at Rs. 15,214 Mn. as against Rs. 12,925 Mn. Advanced markets sales (U.S., EU & Japan) grew by 10% to Rs 7,853 Mn. over Q4 FY 2009-10 Emerging markets sales grew by 45% to Rs. 1,220 Mn, Q4 FY 2010 -11 as against Rs. 840 Mn, Q4 FY 2009-10

Net sales within India grew by 20% during Q4 FY 2010-11 recording revenue of Rs. 3,907 Mn. and net sales outside India grew by 17% recording revenue of Rs. 11,209 Mn. SALES CAGR 27% EBIDTA CAGR 32% PAT CAGR 38% Lupin is investing Rs.450 cr on capacity expansion, ramping up sales force and launching new

products. The company has already expanded its reach from 890 medical representatives 3 years back to 3,500 at present and is looking to hire more employees this fiscal in India. Lupin has got a rich pipeline for various geographies. They have close to about 145 filing for America as of now; and there could be a few more by the end of this fiscal targeting annual revenue of $3 billion, three times that of the revenue in 2010. Intact growth in FY 2011-12 in the sector due to 1) Visibility increase in launches in US. 2) OCs launch from Sep 2012E.3) Minimal threat of generic competition to Suprax. We believe the recent fall in stock is a good opportunity point as long term drivers are intact. We recommend BUY on the stock at CMP 430 with a target price of Rs.510... Valuing it at 20x FY2012E earnings. BUY RURAL ELECTRIFICATION CORPORATION LIMITED (REC) CMP : 200; Target : 300 in 6 months Rural Electrification Corporation Limited (REC), under Ministry of Power, was incorporated on July 25, 1969 under the Companies Act 1956. REC a listed Public Sector Enterprise Government of India with a net worth of Rs. 11,080 Crore as on 31.03.10. REC provides loan assistance to SEBs/State Power Utilities for investments in rural electrification schemes through its Corporate Office located at New Delhi and 17 field units (Project Offices), which are located in most of the States. The company has been rated among the top 500 Global Financial Services brands for 2010 by UK-based plc Brand Finance. REC is also among the Forbes Global 2000 companies for 2010. Rural Electrification Corporation (REC)'s net profit rose 28.4% to Rs 2569.92 crore on 26.7% increase in total income to Rs 8495.26 crore in the year ended March 2011 over the year ended March 2010. At the time of announcing Q4 results, the board of directors of the company recommended a final dividend of Rs 4 per share for the year ended March 2011 For 2011-12, we expect RECs loan growth to stabilise around 25 per cent, led by slowing disbursements and higher competition. Its disbursements are estimated to grow by 20 per cent, with some cushion from undisbursed loans of over Rs 100,000 crore. We have a BUY rating on the stock at CMP of 202 due to RECs robust long-term business outlook and valuations. Also to post compounded earnings growth of 25 per cent and average return on equity (RoE) of 22 per cent over 2011-12. BUY SYNDICATE BANK CMP : 116; Target : 160 in 1 year SYNDICATE BANK was established in 1925 spanning over 80 years of pioneering expertise, the Bank has created for itself a solid customer base comprising customers of two or three generations. Syndicate Bank has posted sharp growth of 72.02% in its net profit at Rs 2.89 billion for Q4FY11 as against Rs 1.68 billion for corresponding quarter a year ago.

Total income of the bank has increased by 24.58% at Rs 34.16 billion for Q4FY11 from Rs 27.42 billion for Q4FY10. On an annual basis, the company posted revenue of Rs.11450.86 cr , up by 14% and net profit of Rs.1047.95 cr , up by 28.5% in March 2011. The board has recommended a dividend of Rs 3.70 a share (37%) for the year 2010-2011. The Global Business of the Bank increased to Rs. 2,43,946 crore from Rs. 2,08,476 crore. Global deposit reached to Rs. 1,35,596 crore while advances reached to Rs. 1,08,350 crore as on 31.03.2011. Inflationary expectations & tight liquidity adversely impacted the NIM (Net Interest Margin) which leads to fall in this stock price. The concern negative points appears to be unfreeze & correction in the stock overdone. Syndicate loan books expected to grow by 20%. Thus the stock looks attractive investment opportunity. Since its 52 week high of Rs 164 has been declining in a well defined channel lows and highs. At its current low of Rs 113, the stock has underperformed Sensex & Bankex & the close to its book level. We think the stock is cheap at 1.4x estimated FY12 book value. Thus studying all the aspect we recommend a strong BUY with the target 160 BUY AREVA T&D CMP : 260 ; Target : 440 in 1 year India Ltd, the Indian subsidiary of AREVA France SA, engages in the design and manufacture of equipment, systems, and services for transmission and distribution of electricity in India. Areva managed to retain its leadership position for the third year has posted a net profit of Rs. 88.08 crore in Dec 2010 quarter, an increase of 30% Y-o-Y. Net sales rose to Rs.1327 cr in Dec quarter compare to Rs.1150 cr in previous years quarter. Eight new factories were built at three locations: Vadodora in Gujarat, and Hosur and Padappai in Chennai in Tamilnadu. The comply of Areva T&D Indias business at global level by the Consortium of Alstom-Schneider continues to fortify on the stock. Although the signs of recovery are emerging, the stock is currently trading at lower valuations that contradict the fundamental. Building on the strong operating performance with relatively low interest and depreciation cost as proportion to sales and lower tax incidence, we expect company to register CAGR of 13.5% respectively. We expect the stock perform dominant in earning at CMP 265 with a target price of 440. BUY KAMANWALA HOUSING CONSTRUCTION CMP : 39 ; Target : 70 in 6 months Kamanwala Housing Construction Limited (KHCL), a company with a 25-year track record, based at Mumbai is into construction and development of commercial and residential buildings. It owns the famous Filmistan studio in partnership and has been in news recently that it is selling the land for a whooping amount of Rs.600 cr. Kamanwala completed a commercial project Pinnacle Corporate Park at Mumbais most developing commercial hub Bandra Kurla Complex. Kamanwalas Savoy Residence, a residential project of 60000 sq ft. in Santacruz West has been completed. Work at Savoy chambers, a commercial project of 67000 sq.ft in Santacruz West is completed. Kamanwala is constructing 5 towers residential project in Malad West .They are developing SRA project at Mahim. Kamanwala owns 125000 sq ft of land in Oshiwara area. They are soon starting with development of 35 acres of land in Hyderabad. Kamanwala holds huge land in Noida and Turbhe as well. With total land asset of more than Rs.1000 cr, market is severely undervalued at 40 with market capital of Rs.55 cr. Considering the zeroing of debt the company has undertaken, completion of its various projects and its land bank, we recommend a STRONG BUY on Kamanwala with it targeted to 70 in 6 months.

BUY NEYVELI LIGNITE CORPORATION LIMITED (NLC) CMP : 100 ; Target : 150 in 6 months NLC is a government-owned lignite mining Indian company, which is wholly owned by the Union Government (49%) and administered via coal ministry. It is recently announced as Navratna by Government of India in April 2011. NLC Neyveli spreads over an area of around 54 square km, comprising Neyveli Township and temporary colonies around 32 blocks. The company runs the biggest open-pit lignite mines in India and mines around 24 million tonnes of lignite annually for fuel, with an installed capacity of 2490 MW of electricity per annum. NLC now elaborated its project to Rajasthan also in mining as well as thermal stations, 3 big mines also supplies a huge amount of sweet water to Chennai. The Tamil Nadu electricity board has a JV with the Neyveli Lignite Cooperation (NLC) for two projects A 1000-MW coal-based project at Tuticorin in southy Tamil Nadu at the cost of Rs 4000 crore and the Jayamkondam lignite power project at a cost of Rs 5000 crore for 1000 MW power plant. The company has also planned to develop clean coal technologies like extraction of coal bed methane (CBM) and Underground coal gasification for which several steps have been taken. Neyveli Lignite is an open-cast mechanized lignite mine. The Company has 50 percent joint venture with Tamil Nadu Electricity Board. Recently, the company announced its plans to invest about $8.2 billion on power generation and mining capacity augmentation by 2017. The plan also includes development of power projects using other fuel feed. Of the proposed investment, $2.04 billion has already been spent on ongoing projects. Strong expansion & diversification plans to explore coal-based, wind and solar power generation projects will add on strength to the cashbook.

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SUMAN JAIN (CEO) Email: sumanjain@smartprofit.in DIPAK MANGELA (Research Analyst) Email: dipak.mangela@smartprofit.in SHAILESH GOWDA (Associate Executive) Email: shailesh.gowda@smartprofit.in

ANKITA JAIN (Director) Email: ankita@smartprofit.in MANSINGH RAI (Associate Executive) Email: mansingh.rai@smartprofit.in