Market Outlook

India Research
April 27, 2012

Dealers Diary
The Indian markets are expected to open flat to negative, tracing mixed opening in the major Asian bourses and flat opening in the SGX Nifty. Globally, U.S. stocks moved mostly higher over the course of the trading day on Thursday, adding the gains posted in the previous session. The markets benefited from upbeat housing data, which helped to overshadow another disappointing jobs report. A report released from the National Association of Realtors showed a better than expected increase in pending home sales in the month of March. European markets finished mixed on Thursday, following the strong gains from the previous two sessions. The weaker than expected sentiment result from the Eurozone dragged the markets lower. Meanwhile, Indian shares ended a lackluster trading session slightly lower on Thursday, as traders rolled over the positions in the derivatives segment. Most Asian markets edged higher on Thursday, as a rally on Wall Street overnight on relief over the Fed's assessment of the U.S. economy and strong U.S. corporate earnings.
Domestic Indices BSE Sensex Nifty MID CAP SMALL CAP BSE HC BSE PSU BANKEX AUTO METAL OIL & GAS BSE IT Global Indices Dow Jones NASDAQ FTSE Nikkei Hang Seng Straits Times Shanghai Com Chg (%) (Pts) (Close)

(0.1) (0.3) (0.3) (0.4) (0.3) (0.6) (0.4) (0.8) 0.1 (0.1) 0.4
Chg (%)

(20.6) 17,131 (13.0) (19.2) (27.5) (20.2) (40.8) 5,189 6,248 6,726 6,747 7,160

(49.9) 11,666 (88.7) 10,514 5.8 10,981 (4.6) 22.4

(Pts)

7,896 5,502
(Close)

0.9 0.7 0.5 0.0 0.8 0.2 (0.1)

113.9 13,205 21.0 29.8 0.8 6.9 (2.1) 3,051 5,749 9,562 2,988 2,405

Markets Today
The trend deciding level for the day is 17,136 / 5,195 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,188 17,245 / 5,210 5,231 levels. However, if NIFTY trades below 17,136 / 5,195 levels for the first half-an-hour of trade then it may correct up to 17,079 17,027 / 5,174 5,158 levels.
Indices SENSEX NIFTY S2 17,027 5,158 S1 17,079 5,174 PIVOT 17,136 5,195 R1 17,188 5,210 R2 17,245 5,231

163.4 20,810

Indian ADRs

Chg (%)

(Pts)

(Close)

INFY WIT IBN HDB

1.6 0.0 0.6 0.1

0.8 0.0 0.2 0.0

$46.9 $9.8 $32.5 $33.8

News Analysis

4QFY2012 Result Reviews Idea Cellular, MRF, Vesuvius India 4QFY2012 Result Previews ICICI Bank, Axis Bank, Hexaware, HCC

Advances / Declines Advances Declines Unchanged

BSE

NSE

1,125 1,613 121

535 886 74

Refer detailed news analysis on the following page

Net Inflows (April 25, 2012)

` cr FII MFs Purch 2,212 448 Sales 3,051 558 Net (839) (110) MTD (1,598) (525) YTD 43,728 (6,099)

Volumes (` cr) BSE NSE

2,402 12,258

FII Derivatives (April 26, 2012)

` cr
Index Futures Stock Futures

Purch 4,016 6,612

Sales 4,365 6,551

Net (348) 61

Open Interest 9,125 20,061

Gainers / Losers
Gainers Company
United Spirits Rajesh Exports Tata Comm Punj Lloyd Idea Cellular

Losers Company
GMR Infra United Phos India Infoline Allahabad Bank Canara Bank

Price (`)
782 140 235 54 83

chg (%)
5.9 5.0 4.9 4.0 4.0

Price (`)
27 113 54 165 439

chg (%)
(6.5) (5.8) (5.2) (5.1) (4.9)

Please refer to important disclosures at the end of this report

Sebi Registration No: INB 010996539

Market Outlook | India Research

Result Reviews
Idea (CMP: `83 / TP: - / Upside: -)
For 4QFY2012, Idea Cellular (Idea) reported healthy revenue growth; however, the company disappointed marginally on the operating front. Revenue came in at `5,370cr, up 6.7% qoq, on the back of 2.7% qoq growth in MOU to 379min and subscriber growth of 5.9% qoq with end-of-period subscriber base standing at 112.7mn. However, the companys ARPM declined by 2.5% qoq to `0.42/min, which the company said is due to market place battle and overcapacity. EBITDA margin decreased by 146bp qoq to 25.3% due to higher license costs. PAT came in at `239cr, up 18.8% qoq, aided by ~20% qoq lower interest costs. We remain Neutral on the stock.

Y/E March FY2013E FY2014E

Sales (` cr) 23,002 25,921

OPM (%) 26.6 26.9

PAT (` cr) 1,077 1,502

EPS (`) 3.3 4.5

ROE (%) 7.1 9.2

P/E (x) 25.5 18.3

P/BV (x) 2.0 1.8

EV/EBITDA (x) 6.2 5.2

EV/Sales (x) 1.6 1.4

Note: Estimates are subject to change post conference call

MRF 2QSY2012 Review (CMP `11,236, TP - `13,106, Upside: 17%)

For 2QSY2012, MRF reported top-line growth of 25.4% yoy to `2,993cr, slightly higher than our estimate of `2,929cr. This was mainly driven by improvement in exports and better replacement demand. The companys EBITDA margin improved by 160bp yoy to 10.9% in 2QSY2012 on the back of softening rawmaterial prices, mainly rubber, which constitutes ~60% of the total raw-material cost for the company. Profit for the quarter surged by 63% yoy to `150cr as compared to `92cr in 2QSY2011. We expect MRFs adjusted PAT to post a 42.4% CAGR over SY2011-13E, driven by better demand and stabilizing rubber prices. We maintain our Buy recommendation on the stock with a target price of `13,106, based on a target P/E of 8.0x for SY2013E.

Y/E Sept SY12E SY13E

Sales (` cr) 12,390 14,400

OPM (%) 11.1 11.4

PAT (` cr) 11.1 11.4

EPS (`) 1,468 1,638

ROE (%) 16.5 17.3

P/E (x) 7.7 6.9

P/BV (x) 1.6 1.3

EV/EBITDA (x) 5.2 4.5

EV/Sales (x) 0.6 0.5

Vesuvius India 1QCY2012 Review (CMP `422, TP - , Upside -)

For 1QCY2012, VIL reported top-line growth of 15.8% yoy to `139cr, marginally lower than our estimate of `142cr, however on a sequential basis, the revenue declined by 6.1%. The companys EBITDA margin dipped by 376bp yoy to 14.9% in 1QCY2012 on the back of increased raw material prices. Profit remained flat yoy at `12cr as compared to `13cr in 1QCY2011. The company has acquired 15 acres of land in Visakhapatnam for setting up its fifth plant. We expect improvement in production volume due to the commencement of the newly expanded Kolkata plant; however the demand outlook is not favourable.
April 27, 2012

Market Outlook | India Research

Moreover, volatility in raw material prices is also a concern. Hence, we recommend a Neutral on the stock.

Y/E Dec
CY12E CY13E

Sales (` cr)
621 714

OPM (%)
15.3 15.9

PAT (` cr)
55 68

EPS (`)
27 34

ROE (%)
36.3 42.2

P/E (x)
15.4 12.6

P/BV (x)
2.5 2.1

EV/EBITDA (x)
7.8 6.2

EV/Sales (x)
1.2 1.0

Result Previews
ICICI Bank
ICICI Bank is slated to announce its 4QFY2012 results. We expect the bank to report moderate net interest income growth of 13.3% yoy to `2,844cr. Non-interest income growth is expected to be healthy at 23.8% yoy to `2,032cr. Pre-provision profit of the bank is expected to rise by 22.5% yoy. Net profit is expected to increase only by 18.3% yoy to `1,719cr on account of higher provisioning expenses (expected to increase by 24.1% yoy) and higher tax outgo (expected to increase by 34.1% yoy). At the CMP, the stock is trading at attractive valuations of 1.4x FY2014E ABV (without adjusting value of subsidiaries). We maintain our Buy view on the stock with a target price of `1,135.

Axis Bank
Axis Bank is slated to announce its 4QFY2012 results. We expect the bank to report healthy NII growth of 32.4% yoy to `2,252cr. NIM, on a sequential basis, is likely to remain flat with a downward bias. Non-interest income is expected to increase by relatively moderate 9.4% yoy to `1,586cr. Pre-provision profit of the bank is expected to register growth of 22.8% yoy. However, owing to higher provisioning burden (an increase of 104.7% yoy), net profit is expected to increase by relatively low 13.6% yoy to `1,159cr. The stock is currently trading at attractive valuations of 1.5x FY2013E ABV more than 50% discount to HDFC Bank, despite similar earnings quality, profitability and growth expectations over FY2013-14. Hence, we maintain our Buy recommendation on the stock with a target price of `1,550.

Hexaware- 1QCY2012
Hexaware is slated to announce its 1QCY2012 results. We expect the company to post revenue growth of 4.0% qoq to US$88mn, majorly led by volume growth. In INR terms, revenue is expected to come in at `440cr, up 1.8% qoq. EBITDA margin is expected to decline by 140bp qoq to 21.6% due to qoq INR appreciation against USD. PAT is expected to come in at `77cr. We maintain our Neutral view on the stock.

April 27, 2012

Market Outlook | India Research

HCC
For Hindustan Construction Company (HCC), we project a 15.0% yoy decline in revenue for 4QFY2012 to `1,022cr due to slowdown in execution on account of gloomy macro environment. On the EBITDA front, we expect a dip of 200bp yoy to 11.8% on the back of muted margin performance in the past two quarters. On the bottom-line front, we expect loss of `23.2cr in 4QFY2012 against profit of `22.6cr in 4QFY2011 due to poor show expected on the revenue and margin front and owing to escalating interest cost, which is expected to post a yoy jump of 24.8%. We continue to maintain our Neutral view on the stock.

Quarterly Bloomberg Brokers Consensus Estimates

Axis Bank - (27/04/2012)
Particulars (` cr) Net profit 4Q FY12E 1,170 4Q FY11 1,020 y-o-y (%) 15 3Q FY12 1,102 q-o-q (%) 6

ICICI Bank - (27/04/2012)

Particulars (` cr) Net profit 4Q FY12E 1,732 4Q FY11 1,452 y-o-y (%) 19 3Q FY12 1,728 q-o-q (%) 0

Jindal Steel & Power Ltd. - Consolidated (27/04/2012)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 4Q FY12E 4,859 1,953 40.2 1,130 4Q FY11 3,848 1,727 44.9 1,002 13 y-o-y (%) 26 13 3Q FY12 4,355 1,742 40.0 996 13 q-o-q (%) 12 12

Siemens India - (27/04/2012)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 2Q SY12E 3,150 306 9.7 196 2Q SY11 3,034 445 14.7 278 (30) y-o-y (%) 4 (31) 1Q SY12 2,361 123 5.2 71 176 q-o-q (%) 33 148

April 27, 2012

Market Outlook | India Research

Maruti Suzuki - (28/04/2012)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 4Q FY12E 11,712 924 7.9 566 4Q FY11 9,864 1,010 10.2 660 (14) y-o-y (%) 19 (8) 3Q FY12 7,664 417 5.4 206 175 q-o-q (%) 53 122

Exide Industries Ltd - (30/04/2012)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 4Q FY12E 1,353 209 15.4 135 4Q FY11 1,226 222 18.1 163 (17) y-o-y (%) 10 (6) 3Q FY12 1,250 166 13.2 104 30 q-o-q (%) 8 26

Bank of India Ltd - (30/04/2012)

Particulars (` cr) Net profit 4Q FY12E 700 4Q FY11 494 y-o-y (%) 42 3Q FY12 716 q-o-q (%) (2)

United Phosphorous Ltd - Consolidated- (30/04/2012)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 4Q FY12E 1,915 348 18.2 164 4Q FY11 1,805 317 17.5 217 (25) y-o-y (%) 6 10 3Q FY12 1,872 348 18.6 112 45 q-o-q (%) 2 (0)

Dabur India Ltd - Consolidated- (30/04/2012)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 4Q FY12E 1,345 224 16.7 161 4Q FY11 1,116 188 16.9 147 10 y-o-y (%) 21 19 3Q FY12 1,453 232 16.0 173 (7) q-o-q (%) (7) (3)

Titan Industries Ltd - (30/04/2012)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 4Q FY12E 2,231 179 8.0 134 4Q FY11 1,768 106 6.0 84 60 y-o-y (%) 26 68 3Q FY12 2,440 213 8.7 164 (18) q-o-q (%) (9) (16)

April 27, 2012

Market Outlook | India Research

Hindustan Unilever Ltd - (01/05/2012)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 4Q FY12E 5,683 819 14.4 653 4Q FY11 4,899 647 13.2 569 15 y-o-y (%) 16 27 3Q FY12 5,770 970 16.8 754 (13) q-o-q (%) (2) (16)

Economic and Political News

India to receive normal monsoon this year Government mulls hike in MNREGA wages IT waiver to private PF trusts may extend till March 2013

Corporate News

Government proposes a board for growth of auto sector Government may reject Coal India's mininum penalty clause in FSA ONGC wants Centre to offset additional cess on crude United Phosphorous to move tribunal against CCI fine Sesa Goa to begin exploration in Liberia mines this week Mahindra to market SsanYong cars in South Africa Rabobank sells 3.4% stake in Yes Bank for `453cr

Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

Results Calendar
27/04/2012 28/04/2012 30/04/2012 01/05/2012 02/05/2012 03/05/2012 04/05/2012 ICICI Bank, Jindal Steel, Axis Bank, Siemens, Indiabulls Fin., Hexaware, HCC Maruti Titan Inds., Bank of India, Dabur India, Godrej Consumer, Exide Industries, Oriental Bank, United Phosphorus, Areva, Vijaya Bank, Punj Lloyd, KPIT Cummins, Automotive Axle, Taj GVK HUL Bharti Airtel, Hero Motocorp Marico, Aventis, KEC International, Finolex Cables Bank of Baroda, Corporation Bank, D B Corp, ITD Cementation

April 27, 2012

Market Outlook | India Research

Research Team Tel: 022 - 39357800

Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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April 27, 2012