Tata Steel Future Projections

INDIA DAILY
February 16, 2011
India
15-Feb 1-day1-mo 3-mo
Sensex
18,274
Nifty
Contents
Tata Steel: Solid operational performance
0.5
(3.1) (10.5)
Global/Regional indices
Dow Jones
Results
5,481
0.4 (3.1) (10.0)
12,227
(0.3)
3.7
9.1
2,804
(0.5)
1.8
11.6
Nasdaq Composite
FTSE
6,037
(0.4)
0.6
3.7
Nikkie
10,782
0.3
2.7
10.1
IVRCL Infrastructures: Revenue and EBITDA gains nullified by interest cost and
depreciation
Hang Seng
22,900
Jubilant Lifesciences: Disappointing quarter
Value traded India
Reliance Power: Expensive despite recent correction
KOSPI
2,009
(1.0) (5.7) (3.3)

(0.1) (4.7)
5.8
Cash (NSE+BSE)
171
Derivatives (NSE)
1,507
2,105 1,429
163
82
Deri. open interest
1,547
1,524 1,716
News Round-up
` India's textile, pharmaceuticals & services sectors could expect greater market
openings & automobile parts companies may face stiffer competition after the
country signs a trade agreement with Japan. (ECNT)
` Oil PSUs to hike jet fuel price 4.1% in metros. Oil marketing companies will hike
prices by an average of INR 2,204.48 a kilo litre. (THBL)
Forex/money market
Change, basis points
15-Feb 1-day
Rs/US$
10yr govt bond, %
1-mo
3-mo
45.5
29
8.1
(2)
(12)
Net investment (US$mn)
` Oil minister S Jaipal Reddy indicated that the govt. may not be able to clear Cairn
Energy Plc's move to sell control in its Indian arm to Vedanta Resources without
meeting state run ONGC's (ONGC IN) demand for an equitable royalty regime in the
Barmer oilfields that account for 90% of Cairn India's (CAIR IN) valuations. (TTOI)
14-Feb
MTD CYTD
FIIs
50
(369) (1,756)
MFs
56
100
(282)
Top movers -3mo basis
` Kishore Biyani is spinning off his consumer durables business, Ezone, into a separate
entity in order to maximize value from it. The promoter of Pantaloon Retail (PF IN) is
likely to induct strategic investors in 3 months. (ECNT)
` Reliance Industries Ltd (RIL IN) is now going after the tablet PC market, presently
dominated by Apple and Samsung at the premium end. (BSTD)
` GMR Infrastructures (GMRI IN) has raised around USD 113 mn of debt from India
Infrastructure Finance Company Ltd for modernizing Delhi International Airport.
(BSTD)
` Tata Motors (TTMT IN) said it was redrawing distribution plans of its joint venture
with Fiat as sales number of the Italian car maker had not been up to expectations.
Tata Motors global sales up 16% in January. (BSTD)
` TCS (TCS IN) expects to make its fully-integrated information technology solution for
small and medium enterprises, iON, a 1 bn on business in five years. TCS has already
signed up over 130 clients for iON and plans to take the customer base to 1,000 in a
year. (BSTD)
` Jindal Steel and Power Ltd (JSP IN) gets conditional green nod for Orissa plant. (THBL)
` Venus Remedies Ltd (VNR IN) announced the launch of its super speciality oncology
segment 'Passion Oncobiz', entailing an investment of USD 2 mn. (THBL)
` HCL Technologies (HCLT IN) sets up Global Enterprise Mobility lab in Singapore.
(THBL)
Source: ECNT= Economic Times, BSTD = Business Standard, FNLE = Financial Express, THBL = Business Line.
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES.
REFER TO THE END OF THIS MATERIAL.
Change, %
Best performers
15-Feb 1-day
1-mo
3-mo
HCLT IN Equity
483.0
0.2
2.6
23.1
BHARTI IN Equity
329.2
0.5
(4.2)
5.0
NACL IN Equity
405.2
1.9
6.2
4.7
TCS IN Equity
1097.7
(1.3)
(2.0)
4.7
INFO IN Equity
3106.6
2.2
(3.1)
4.6
UT IN Equity
35.0
(3.6)
(39.2)
(53.0)
IVRC IN Equity
72.9
1.3
(33.7)
(45.1)
Worst performers
PUNJ IN Equity
72.5
(1.0)
(27.6)
(39.2)
IBREL IN Equity
115.3
(1.7)
(5.2)
(38.3)
RCOM IN Equity
101.6
4.4
(26.7)
(37.1)
BUY
Tata Steel (TATA)

Metals & Mining
FEBRUARY 16, 2011

RESULT
Coverage view: Attractive
Solid operational performance. Tata Steels standalone and consolidated EBITDA was
1.7% and 7% ahead of our estimate. However, below EBITDA line items such as high
tax provision and loss on impairment of assets led to net income miss. Corus
performance, on expected lines, was extremely weak. Tata Steel can deliver significant
earnings growth and stock performance over the next two years from cost-push based
steel price increase, growth from India brownfield expansion and overseas raw material
projects. We reinstate coverage with a BUY rating and end-FY2012E TP of Rs710.
Company data and valuation summary
Tata Steel
Stock data
52-week range (Rs) (high,low)
739-449
Market Cap. (Rs bn)
589.6
Shareholding pattern (%)
Promoters
32.5
FIIs
17.0
MFs
3.7
Price performance (%)
1M
3M
12M
Absolute
(0.9)
(0.3)
14.2
Rel. to BSE-30
2.2
10.8
0.2
Forecasts/Valuations
EPS (Rs)
EPS growth (%)
P/E (X)
Sales (Rs bn)
Net profits (Rs bn)
EBITDA (Rs bn)
EV/EBITDA (X)
ROE (%)
Div. Yield (%)
Price (Rs): 617

Target price (Rs): 710
BSE-30: 18,274
2010
2011E 2012E
(3.3)
64.4
69.7
(103.6) (2,051.8)
8.2
(186.8)
9.6
8.8
1,023.9 1,128.4 1,204.5
(3.3)
65.3
70.6
80.4
153.8 175.4
13.2
6.7
5.8
(1.5)
22.4
18.4
1.1
1.2
0.0
Indian operations shine with unexpected spike in steel realization

Tata Steel reported 3QFY11 standalone EBITDA of Rs28.2 bn (+30.8% yoy, +7.3% qoq), 1.7%
ahead of our estimate. Unexpected 8.8% qoq increase in realization to US$993/ ton (our estimate
was US$958/ ton) drove most of the surprise at the EBITDA level. Such a spike in realizations was
against the industry trend; Tata Steel management attributed this to qoq increase in long product
prices (Rs29,150/ ton, +6% qoq); in addition other steel products may have also contributed. Flat
product realizations declined sequentially. EBITDA/ ton increased to US$372, up 12.2% qoq. Net
income of Rs15.1 bn (+27% yoy, -26.7% qoq) missed our estimate on higher tax payout.
Consolidated net income missed our estimate, operational performance was strong
Tata Steel reported consolidated EBITDA of Rs34.2 bn (-6.7% qoq, +16.1% yoy). However, net
income of Rs8.3 bn (adjusted for extraordinary items) missed our and Street estimates. We
attribute the miss to two factors (1) Rs1.2 bn impairment charge in other income line after a fire in
Imjuiden plant destroyed a few facilities and (2) high effective tax rate of 39.7%.
Corus performance weak but on expected lines
On expected lines Corus reported a weak quarter with EBITDA of US$88 mn and EBITDA/ ton of
US$25 (-55% qoq, -33% yoy), though still better than our estimate. Lag impact of increase in raw
material prices (+9% qoq) on the P&L hurt profitability on a sequential basis. Performance was
helped by carbon credit sales of US$54 mn which in turn was partly offset by US$31 mn
impairment charge on certain Imjuiden assets. Tata indicates that carbon credit sales may recur as
long as plant capacity utilization is above 75%. Expect Corus profitability to improve in 4Q.
Maintain BUY on attractive valuations
Tata Steel trades at 5.9X FY2011E and 5.1X FY2012E EBITDA (adjusting for CWIP) and 8.8X
FY2012E earnings. Tata Steels brownfield expansion and investments in raw material projects can
deliver significant value in the medium term. Reinitiate with a BUY rating and end-FY2012E target
price of Rs710. We assign 6.5X to Tata Steel Indias FY2012E EBITDA and 5.5X to Corus.
For private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.
Tata Steel
Metals & Mining
Debt increases by 11% to US$13.2 bn

Tata Steels consolidated gross debt and net debt increased by ~US$1.1 bn qoq to US$13.2
bn and US$11.8 bn, respectively. The following factors may have led to the increase (1)
increase in working capital requirements in Europe due to increase in raw material prices, (2)
US$250 mn increase due to fluctuation in various foreign currency debt of Tata Steel India.
Tata Steel indicates that all its FX debt is fully hedged and (3) gross block which increased by
about a US$1 bn. Note that Tata Steel has aggressive capex plans of about US$2.3 bn for
FY2012E and US$2.1 bn for FY2013E.
Update on strategic projects

` DSO and New Millennium Corp. Tata Steel and New Millennium Corporation (NML) are in
exclusive talks with respect to development of two of the latters iron ore projects
LabMag and KeMag which cumulatively have reserves of up to 5.6 bn tons. This
exclusivity agreement will expire on Feb 28, 2011. As far as the Direct Shipping Ore
project is concerned, environmental approval for the first phase has been obtained and
commercial iron ore production will likely commence by 2QCY12E.
` Orissa project. Ground work to start construction for the Orissa project is already
underway. Tata Steel has secured the project site with boundary wall and fence and
started piling, besides foundation at the sinter plant has commenced. Construction of
other utilities is under progress. Initial phase of the Orissa plant will start with steelmaking capacity of 3 mtpa.
Few changes to our estimates

We build in our economists revised Re/US$ forecast of Rs45.6, Rs45.5 and Rs44 for
FY2011E, FY2012E and FY2013E, respectively, from Rs45.5, Rs44.5 and Rs44.1 earlier. We
have also fine tuned our HRC price assumption for India business over the next two years
and build in higher raw material prices. We also model recent issuance of 57 mn share at
Rs610 from its follow-on public offering. All factors results in 6.5% and 3.9% reduction in
our FY2012E and FY2013E EPS. Our EBITDA estimates remain largely unchanged. Exhibit 1
details the key changes to our estimate. BUY with FY2012E fair value of Rs710/ share.
We value standalone India operations of Tata Steel at 6.5X FY2012E EBITDA. This is higher
than historical levels, but we believe it is fair as it partly captures volume growth potential
for the India business. Put slightly differently, FY2012E EBITDA does not capture brownfield
expansion while the debt taken for this expansion is fully captured in the EV; assigning
higher multiple corrects this anomaly. We assign 5.5X to Corus and far-east operations, fair
noting lower profitability and lack of raw material security. We value listed investments at a
20% discount to the market price.
Our target price captures value from MOU signed by Corus for sale of Teeside Cast Products
(TCP) plant to SSI, Malaysia for US$500 mn; this adds Rs24 to fair value. However, our fair
value does not capture any upside from New Millennium Corp (Canadian iron ore project) or
Riversdale Mining investment. Note that Rio Tinto recently extended an open offer to
acquire Riversdale Mining at an equity value of US$3.9 bn. Tata Steels stake in Riversdale is
worth Rs40/share at Rios acquisition offer price.
KOTAK INSTITUTIONAL EQUITIES RESEARCH
Metals & Mining
Tata Steel
Exhibit 1: Tata Steel, Change in estimates, March fiscal year-ends, 2011-13E (Rs mn)
2011E
Earnings (consolidated)
Net sales
EBITDA
Adj. PAT
EPS (Rs)
Volumes
India (mn tons)
International operations (mn tons)
Pricing
HRC price India (US$/ton)
Realization (US$/ton)
Revised estimates
2012E
2013E
2011E
Old estimates
2012E
2013E
2011E
% change
2012E
2013E
1,128,398
153,843
65,270
64.4
1,204,467
175,421
70,606
69.7
1,232,243
202,586
88,655
87.5
1,149,759
156,206
63,411
66.3
1,181,781
175,766
71,290
74.5
1,224,905
201,721
87,106
91.1
(1.9)
(1.5)
2.9
(2.9)
1.9
(0.2)
(1.0)
(6.5)
0.6
0.4
1.8
(3.9)
6.4
14.4
6.9
14.7
9.0
14.8
6.5
14.8
7.1
14.9
9.0
15.1
(1.7)
(2.4)
(2.8)
(1.6)
(2.3)
728
1,110
756
1,142
744
1,117
728
1,085
743
1,100
738
1,067
2.3
1.7
3.8
0.7
4.7
Source: Kotak Institutional Equities estimates
Following factors underpin our BUY rating on Tata Steel

` Cost-push based steel price increase will benefit Tata Steel India. We expect steel
prices to move up led by (1) a cost-push increaseiron ore prices have increased by 20%
in the past three months to US$187/ ton China CFR on modest revival in demand
combined with persistent supply issues and (2) seasonal increase in demand in 1HCY11E.
This should benefit integrated players such as Tata Steel, in our view. A US$10/ ton
increase in iron ore prices benefits earnings by 5%. We assume that Corus with a
converter business model will earn steady conversion margin and will have the ability to
pass on raw material price increase to consumers.
` Commissioning of value-accretive India capacity expansion. Tata Steel India is on
track to commission 2.9 mtpa steel-making capacity expansion in Jamshedpur by end2011. This will reflect in strong 27% volume growth in FY2013E. Note that the expanded
capacity will be self-sufficient on iron ore and generate profitability in excess of US$300/
ton. More important, EBITDA contribution from Indian operations may increase to 70%
of the overall EBITDA by FY2013E from less than 50% in FY2008-09. In our view, this will
significantly de-risk earnings.
` Benefits from overseas raw material projects may surprise on the upside.
Investments in raw material security, i.e. Riversdale Mining and New Millennium (iron ore
project in Canada) can potentially add US$300 mn to annual EBITDA. In any case, Tata
Steels holding is worth Rs40/share, based on Rios bid price for Riversdale. This value is
not captured in our target price and can be a positive catalyst.
Tata Steel
Metals & Mining
Exhibit 2: Interim results of Tata Steel (standalone), March fiscal year-ends (Rs mn)
Net sales
Expenditure
Consumption of raw materials
Staff Cost
Power and fuel
Freight and handling
Other Expenditure
EBITDA
OPM (%)
Other income
Interest
Depreciation
Pretax profits
Extraordinaries
Tax
Net income
Ratios
EBITDA margin (%)
ETR (%)
EPS (Rs)
Segment revenue
Steel business
Others
Segment EBIT
Steel business
Others
Margins
Steel business
Others
3QFY11E
0.7
0.2
7.9
(12.7)
(4.8)
9.8
(3.3)
1.7
(% chg.)
3QFY10
16.0
8.5
15.4
(8.2)
13.9
10.8
7.0
30.8
2QFY11
4.1
2.2
12.5
(12.5)
(4.5)
10.2
(2.1)
7.3
(82.0)
(4.0)
(0.3)
0.4
26.6
(8.3)
(95.7)
(19.3)
9.2
26.8
26.5
27.0
(98.5)
(2.1)
1.7
(19.3)
3.6
(26.7)
64,971
4,488
16
8
4
(2)
20,141
163
21,764
43
14
5
6
297
34.5
21.7
33.5
32.9
(1.6)
32.9
1.4
(12.3)
3QFY11
73,974
(45,768)
(17,586)
(5,985)
(3,454)
(3,968)
(14,775)
28,205
38.1
113
(3,354)
(2,864)
22,100
(6,966)
15,135
3QFY11E
73,423
(45,683)
(16,301)
(6,859)
(3,626)
(3,614)
(15,282)
27,741
37.8
630
(3,493)
(2,871)
22,006
(5,502)
16,505
3QFY10
63,749
(42,180)
(15,241)
(6,523)
(3,032)
(3,581)
(13,803)
21,569
33.8
2,636
(4,157)
(2,622)
17,426
(5,508)
11,918
2QFY11
71,068
(44,777)
(15,637)
(6,837)
(3,615)
(3,603)
(15,086)
26,290
37.0
7,327
(3,425)
(2,815)
27,378
(6,726)
20,651
38.1
31.5
15.3
37.8
25.0
17.8
33.8
31.6
12.1
37.0
24.6
20.9
67,731
4,418
58,325
4,100
23,015
172
34.0
28.9
Source: Company, Kotak Institutional Equities estimates
Metals & Mining
Tata Steel
Exhibit 3: Interim results of Tata Steel (consolidated), March fiscal year-ends (Rs mn)
Net sales
Expenditure
Consumption of raw materials
Staff Cost
Power and fuel
Other Expenditure
EBITDA
OPM (%)
Other income
Interest
Depreciation
Pretax profits
Extraordinaries
Tax
Net income
Minority interest
Share of profit from associates
PAT after minority interest
Adjusted PAT
Income tax rate (%)
Ratios
EBITDA margin (%)
ETR (%)
EPS (Rs)
Segment revenue
Steel business
Others
Segment EBIT
Steel business
Others
Segment capital employed
Steel business
Others
Margins
Steel business
Others
3QFY11
290,895
(256,648)
(138,887)
(36,087)
(10,314)
(15,935)
(55,426)
34,246
11.8
(1,043)
(7,432)
(11,264)
14,506
1,223
(6,240)
9,489
161
380
10,030
8,266
39.7
3QFY11E
271,006
(238,986)
(120,191)
(35,862)
(9,609)
(14,009)
(59,314)
32,020
11.8
714
(6,969)
(10,889)
14,876
(4,909)
9,967
103
3
10,072
9,967
33.0
3QFY10
262,020
(232,514)
(104,828)
(41,999)
(10,845)
(14,451)
(60,393)
29,506
11.3
4,099
(7,630)
(11,547)
14,428
(1,957)
(8,148)
4,323
(148)
551
4,726
6,280
65.3
2QFY11
286,462
(249,739)
(124,064)
(38,275)
(9,967)
(14,676)
(62,757)
36,723
12.8
8,143
(6,637)
(10,781)
27,448
(316)
(7,450)
19,682
103
3
19,788
19,998
27.5
11.8
39.7
10.5
11.8
33.0
10.5
11.3
65.3
4.8
12.8
27.5
20.7
275,784
32,357
278,086
26,020
273,067
30,067
21,651
2,036
22,655
3,636
560,932
51,757
7.9
6.3
3QFY11E
7.3
7.4
15.6
0.6
7.3
13.7
(6.6)
7.0
(246.2)
6.6
3.4
(2.5)
27.1
(4.8)
56.9
NM
(0.4)
(17.1)
(% chg.)
3QFY10
2QFY11
11.0
1.5
10.4
2.8
32.5
11.9
(14.1)
(5.7)
(4.9)
3.5
10.3
8.6
(8.2)
(11.7)
16.1
(6.7)
(125.5)
(2.6)
(2.4)
0.5
(162.5)
(23.4)
119.5
(209.1)
(31.0)
112.2
31.6
(112.8)
12.0
4.5
(47.1)
(487.3)
(16.2)
(51.8)
56.9
NM
(49.3)
(58.7)
(0.8)
24.4
1.0
7.6
31,391
2,340
(4.4)
(44.0)
(31.0)
(13.0)
515,096
40,055
535,477
48,788
8.9
29.2
4.8
6.1
8.1
14.0
11.5
7.8
(3.6)
(55.0)
(31.7)
(19.2)
Tata Steel
Metals & Mining
Exhibit 4: Tata Steel, Quarterly analysis of cost-structure, March fiscal year-ends (US$/ton)
3Q 2009
4Q 2009
1Q 2010
2Q 2010
3Q 2010
4Q 2010
1Q 2011
2Q 2011
3Q 2011
Tata Steel India

Steel business
Average realization
Steel EBIT
855
246
672
147
752
228
737
239
783
270
864
342
940
387
842
282
918
312
Realization (US$/ ton)

Raw material cost
Employee cost
Power and fuel cost
Other expenditure
EBITDA/ ton
906
204
109
50
50
222
270
723
299
74
32
41
122
155
803
232
73
47
46
162
243
798
202
74
42
44
173
264
847
205
88
41
48
185
280
927
160
87
43
48
201
387
1,014
151
91
56
55
217
444
912
203
89
47
47
196
332
993
238
81
47
54
200
372
Tata Steel (Consolidated)

Average realization
Steel EBIT
Steel EBITDA
1,130
81
117
878
(40)
(12)
917
(37)
(3)
901
(22)
16
961
78
104
1,003
118
136
1,068
119
155
1,010
116
126
1,083
85
133
Realization (US$/ ton)

Raw material cost
Employee cost
Power and fuel cost
Other expenditure
EBITDA/ ton
1,116
616
150
49
47
158
97
891
514
130
38
44
164
1
901
460
153
37
45
207
(1)
846
395
145
34
49
211
12
906
362
145
37
50
209
102
942
361
135
34
51
199
163
985
375
137
35
57
220
161
1,059
459
142
37
54
232
136
1,142
545
142
40
63
218
134
Exhibit 5: Tata Steel, valuation, March fiscal year-ends, 2012E basis (Rs mn)
Tata Steel standalone

Tata Steel Europe
Tata Steel thailand and other businesses
Total Enterprise Value
EBITDA
Multiple
(Rs mn)
(X)
Enterprise value
EV
(Rs mn)
(Rs/share)
122,600
6.5
799,353
789
44,473
5.5
244,601
241
6,515
5.5
35,834
35
1,079,788
1,066
Consolidated group net debt
400,056
Total borrowings
400,056
395
Arrived market capitalization
679,732
671
Add: Value of investments

Arrived market capitalization
Target price (Rs)
39,530
39
719,262
710
710
Source: Kotak Institutional Equities estimates
Metals & Mining
Tata Steel
Exhibit 6: China import iron-ore fines from India (China CFR) prices (US$/ton)
China CFR 63% Fe
250
200
150
100
50
Feb-11
Oct-10
Jun-10
Feb-10
Oct-09
Jun-09
Feb-09
Oct-08
Jun-08
Feb-08
Oct-07
Jun-07
Feb-07
Oct-06
Jun-06
Feb-06
Oct-05
Feb-05
Jun-05
Source: Bloomberg, Kotak Institutional Equities estimates
Exhibit 7: Tata Steel, Key assumptions, March fiscal year-ends, FY2008-2013E (Rs mn)
2008
2009
2010
2011E
2012E
2013E
705
4.8
394
749
5.2
380
635
6.2
307
728
6.4
389
756
6.9
391
744
9.0
355
1,034
22.8
88
1,254
19.0
103
981
14.2
(20)
1,070
14.4
58
1,060
14.7
67
1,055
14.8
77
42.5
46.0
47.3
45.6
45.5
44.0
Tata Steel (India)

Benchmark HRC Price (US$/ton)
Volume (mn tons)
EBITDA/ton (US$/ton)
Corus
Average realization (US$/ ton)
Volume (mn tons)
EBITDA/ton (US$/ton)
Re/US$ rate
Tata Steel
Metals & Mining
Exhibit 8: Tata Steel (standalone), Profit model, balance sheet and cash flow model, March fiscal year-ends, 2008-2013E (Rs mn)
2008
2009
2010
2011E
2012E
2013E
Profit model (Rs mn)

Net sales
EBITDA
Other income
Interest
Depreciation
Profit before tax
Extraordinaries
Taxes
Profit after tax
Fully diluted EPS (Rs)
196,910
80,138
2,428
(7,865)
(8,346)
66,355
4,309
(23,793)
46,870
47.5
243,157
91,334
3,083
(11,527)
(9,734)
73,156
(21,139)
52,017
52.7
250,220
89,521
8,538
(15,084)
(10,832)
72,143
(21,675)
50,468
51.2
289,175
113,490
8,664
(13,428)
(11,475)
97,251
20,700
(28,308)
89,643
72.9
318,985
122,600
2,865
(12,930)
(13,490)
99,046
(29,714)
69,332
68.4
382,533
141,098
2,865
(10,448)
(17,616)
115,900
(34,770)
81,130
80.1
Balance sheet (Rs mn)

Equity
Deferred tax liability
Total Borrowings
Current liabilities
Total liabilities
Net fixed assets
Capital work in progress
Investments
Cash
Other current assets
Miscellaneous expenditure
Total assets
218,282
6,818
234,942
78,401
538,443
82,561
43,675
41,032
4,650
364,974
1,551
538,443
242,319
5,857
324,188
100,077
672,441
109,945
34,877
423,718
15,906
86,945
1,051
672,442
371,688
8,677
252,392
99,568
732,324
121,624
38,436
449,797
32,341
90,126
732,324
503,046
9,856
237,392
86,690
836,984
125,149
98,436
449,097
59,500
104,802
836,984
563,286
10,847
207,392
93,200
874,724
166,660
98,436
449,097
48,824
111,708
874,724
635,323
12,006
177,392
104,947
929,668
284,044
8,436
449,097
67,210
120,880
929,668
60,778
1,764
(23,951)
38,591
66,599
7,373
(27,711)
46,261
71,874
11,818
(20,237)
63,455
102,297
(8,849)
(75,000)
18,448
83,812
(396)
(55,000)
28,417
99,904
2,574
(45,000)
57,479
40.7
35.9
1.1
1.0
2.7
26.4
16.7
37.6
30.1
1.3
1.1
3.0
22.7
13.9
35.8
28.8
0.7
0.5
2.1
16.5
12.3
39.2
40.8
0.5
0.3
1.3
20.5
14.1
38.4
31.1
0.4
0.2
1.0
13.0
12.1
36.9
30.3
0.3
0.1
0.5
13.5
13.1
Free cash flow (Rs mn)

Operating cash flow excl.working capital
Working capital changes
Capital expenditure
Free cash flow
Ratios
EBITDA margin (%)
EBT margin (%)
Debt/equity (X)
Net debt/equity (X)
Net debt/EBITDA (X)
RoAE (%)
RoACE (%)
Metals & Mining
Tata Steel
Exhibit 9: Tata Steel (consolidated), Profit model, balance sheet and cash flow model, March fiscal year-ends, 2008-2013E (Rs mn)
2008
2009
2010
2011E
2012E
2013E
Profit model (Rs mn)

Net sales
EBITDA
Other income
Interest
Depreciation
Profit before tax
Extraordinaries
Taxes
Profit after tax
Minority interest
Share in profit/(loss) of associates
Reported net income
Adjusted net income
Fully diluted EPS (Rs)
1,315,336
177,824
4,759
(40,854)
(41,370)
100,359
63,351
(40,493)
123,218
(1,399)
1,682
123,500
110,441
112.0
1,473,293
181,277
2,657
(32,902)
(42,654)
108,378
(40,945)
(18,940)
48,492
409
607
49,509
61,750
62.6
1,023,931
80,427
11,859
(30,221)
(44,917)
17,147
(16,837)
(21,518)
(21,208)
(152)
1,269
(20,092)
(3,255)
(3.3)
1,128,398
153,843
8,962
(28,076)
(45,048)
89,680
20,700
(30,906)
79,474
400
507
80,381
65,270
64.4
1,204,467
175,421
2,408
(31,398)
(47,166)
99,264
(29,779)
69,485
360
761
70,606
70,606
69.7
1,232,243
202,586
3,063
(30,147)
(50,401)
125,100
(37,530)
87,570
324
761
88,655
88,655
87.5
Balance sheet (Rs mn)

Equity
Deferred tax liability
Total Borrowings
Current liabilities
Minority interest
Total liabilities
Net fixed assets
Capital work in progress
Goodwill
Investments
Cash
Other current assets
Miscellaneous expenditure
Total assets
287,015
24,545
590,973
339,163
8,327
1,250,022
331,187
88,476
180,500
33,675
42,319
572,309
1,556
1,250,022
217,700
17,094
653,732
313,109
8,949
1,210,583
364,175
88,880
153,649
64,111
61,484
477,229
1,055
1,210,583
230,208
16,541
531,004
309,639
8,841
1,096,232
365,252
92,706
145,418
54,178
67,878
370,800
1,096,232
352,325
17,645
476,004
319,895
8,441
1,174,309
375,204
134,706
145,418
54,685
43,818
420,477
1,174,309
413,839
18,141
461,004
336,049
8,081
1,237,113
416,148
134,206
145,418
55,447
41,635
444,259
1,237,113
493,402
18,767
446,004
342,270
7,757
1,308,198
525,157
44,206
145,418
56,208
84,266
452,943
1,308,198
117,771
(22,227)
(79,967)
15,578
116,077
2,254
(83,608)
34,723
25,583
46,465
(69,472)
2,577
114,669
(39,421)
(97,000)
(21,752)
114,740
(7,628)
(87,610)
19,501
135,534
(2,463)
(69,410)
63,661
13.5
10.4
2.1
1.9
3.0
51.0
14.6
12.3
9.4
3.0
2.6
3.1
24.5
9.9
7.9
3.5
2.3
1.9
5.5
(1.5)
(34.8)
13.6
9.6
1.4
1.2
2.7
22.4
12.1
14.6
10.6
1.1
1.0
2.3
18.4
13.1
16.4
12.4
0.9
0.7
1.7
19.5
14.6
Free cash flow (Rs mn)

Operating cash flow excl. working capital
Capital expenditure
Free cash flow
Ratios
EBITDA margin (%)
EBIT margin (%)
Debt/equity (X)
Net debt/equity (X)
Net debt/EBITDA (X)
RoAE (%)
RoACE (%)
10
SELL
Reliance Power (RPWR)

Utilities
FEBRUARY 16, 2010

RESULT
Coverage view: Cautious
Expensive despite recent correction. Reliance Power (RPWR) stock has corrected by
~35% in the past three months and is now trading at 1.9X FY2012E book. We,
however, maintain our negative stance on account of (1) lack of fuel security for gasbased capacities, (2) dilution of earnings (and valuation) due to merger with RNRL, and
(3) inferior profitability of UMPPs. Operating results in 3QFY11 were ahead of our
estimate on account of better-than-estimated availability. Reiterate SELL.
Reliance Power
Stock data
193-106
Market Cap. (Rs bn)
290.7
Promoters
84.8
FIIs
3.8
MFs
0.3
1M
3M
12M
Absolute
(17.5) (33.4) (14.0)
Rel. to BSE-30
(14.8) (25.9) (24.5)
EPS (Rs)
EPS growth (%)
P/E (X)
Sales (Rs bn)
Net profits (Rs bn)
EBITDA (Rs bn)
EV/EBITDA (X)
ROE (%)
Div. Yield (%)
2011
2.9
0.1
42.5
11.5
8.0
3.0
220.5
5.2
0.0
2012E
4.0
38.4
30.7
41.9
11.1
15.9
48.0
6.6
0.0
Price (Rs): 121

BSE-30: 18,274
2013E
2.5
(36.7)
48.4
121.5
7.0
43.7
18.8
4.0
0.0
Operating results beat estimates on better availability

RPWR reported revenues of Rs2.5 bn, operating profit of Rs617 mn and net income of Rs1.4 bn
against our estimates of Rs2.1 bn, Rs348 mn and Rs1.9 bn, respectively. Higher-than-estimated
revenues were primarily on account of better availability during the quarter (~80%) resulting in
better-than-estimated average realizations. Management has indicated that Rosa has secured the
permission to blend imported coal and availability and PLF should improve further going forward.
Net income miss was primarily driven by significantly lower-than-estimated other income (Rs1 bn
against our estimate of Rs2.9 bn) which was partially offset by (1) lower depreciation on account
of change in depreciation policy for Rosa plant to align with UPERC rates (resulting in depreciation
being lower by Rs297.9 mn) and (2) tax write-backs on account of higher provisioning in previous
quarters.
Maintain SELL despite recent correction as execution and fuel risks remain high
RPWR stock has corrected by ~35% in past three months and is now trading at 1.9X FY2012E
book. We, however, maintain our cautious stance on RPWR given the limited visibility on nearterm earnings growth and high degree of execution and fuel risks embedded in the portfolio.
Continued uncertainty over availability of gas on account of slow ramp-up of supply from KG-D6
block makes us skeptical about the prospects on securing gas in the near term for the proposed
9,200 MW of gas-based capacities (including near-term 2,400 MW at Samalkot). Further, we
believe that UMPPs will not be the value driver for RPWR as they have been bid at a relatively
lower tariff structure. Our DCF-based valuation for Sasan and Krishnapatnam implies a P/B of 1X
on the total equity investment for these projects.
Retain SELL with a revised target price of Rs115/share
We maintain our SELL rating on RPWR with a revised target price of Rs115/share (previously
Rs135/share) as we adjust for dilution upon merger with RNRL. Our target price implies a P/B of
1.8X on FY2012E book value. We have revised our EPS estimates for FY2011E to Rs2.9/share
(previously Rs3.9/share) and for FY2012E to Rs4/share (previously Rs5.3/share) as we account for
dilution upon merger with RNRL and delays in commissioning of projects.
Utilities
Reliance Power
Exhibit 1: Operating results beat estimates on better availability

Interim results for RPWR, March fiscal year-ends (Rs mn)
Net sales
Operating costs
Cost of fuel
Personnel costs
Other expenses
EBITDA
EBITDA margin (%)
Other income
Interest & finance charges
Depreciation
PBT
Provision for tax (net)
Net profit
Extraordinary
3QFY11
2,513
3QFY11E
2,108
3QFY10
(121)
(146)
(267)
2QFY11
1,687
(1,242)
(196)
(458)
617
25
1,038
(685)
(77)
892
544
1,436
(1,242)
(193)
(324)
348
17
2,912
(520)
(400)
2,341
(445)
1,896
1,792
(2)
1,523
(186)
1,336
(997)
(153)
(254)
282
17
3,437
(499)
(375)
2,845
(497)
2,348
EBITDA margin (%)

Tax rate (%)
25
(61)
17
19
12
Key operating parameters

Units generated (MU)
PLF (%)
Average realization (Rs/kwh)
Cost of fuel (Rs/unit)
O&M (Rs/unit)
719
55
3.7
1.7
0.9
690
53
3.3
1.8
0.8
3QFY11E
19
(% Chg.)
3QFY10
2QFY11
49
FY2010
207
FY2011E
11,530
(221)
(245)
(815)
(1,073)
(518)
8,227
(70)
(57)
7,026
(187)
6,839
(5,027)
(1,200)
(2,286)
3,016
26
8,961
(2,219)
(798)
8,960
(949)
8,011
17
17
(518)
3
26
11
545
42
3.3
1.8
0.7
149
69
1.4
1.5
7.1
2,989
66
3.9
1.7
1.2
77
(331)
119
(62)
(41)
(69)
(24)
(39)
(% Chg.)
5,463
2,175
390
181
(381)
28
17
Exhibit 2: Gross value of power projects (Rs bn)

Capacity
Project
Type
(MW)
Rosa I
Coal
600
Rosa II
Coal
600
Butibori
Coal
600
Sasan UMPP
Coal
3,960
Krishnapatnam UMPP
Imported coal
4,000
Dadri
Gas
6,400
Chitrangi
Coal
3,960
Total
20,120
Equity Investment
(Rs bn)
6.0
6.2
7.0
41.0
48.6
38.4
47.5
P/B
(X)
1.5
-0.2
5.2
1.0
1.0
1.9
3.5
1.9
RPWR's
share
100%
100%
74%
100%
100%
100%
100%
Value
(Rs bn)
9.2
-0.9
26.7
42.2
47.7
74.3
166.5
365.6
Cost of equity
(%)
12.5
12.5
12.5
12.5
12.5
15.0
15.0
Exhibit 3: Our SOTP-based target price is Rs115/share

Valuation of RPWR
Gross value of power projects

Add: Equity to be invested
Add: Cash and cash and cash equivalent
Net Value
Valuation
(Rs bn)
(Rs/share)
366
130
(200)
(71)
157
56
322
115
12
Reliance Power
Utilities
Status of power projects and captive coal blocks

We highlight below the execution status of key power projects of RPWR as highlighted by
the management.
` Rosa II (600 MW) the project has achieved all necessary milestone and construction is in
progress. The project has linkage from CCL (E grade coal). The project is likely to
commission by end-FY2012E.
` Butibori (600 MW) the project has achieved all necessary milestone and construction is
in progress. The project has linkage from WCL (D grade coal). The project is likely to
commission by June 2012.
` Sasan UMPP (3,960 MW) all necessary clearances and approvals in place and
construction has commenced. Management has indicated that production from Sasan
coal block is likely to commence by 2012. Peak production is likely to be 25 mtpa. A part
of the coal will be used for Chitrangi project. Management has guided for commissioning
of first unit by January 2012.
` Krishnapatnam UMPP (3,960 MW) all necessary clearances and approvals in place.
RPWR has acquired 3 coal mines in Indonesia for the project. Management has indicated
that production from Indonesian mines will commence by mid-2013 and RPWR will likely
ship in 25 mtpa of Indonesian coal. Indonesian coal will be inferior quality coal (GCV of
4,000 kcal/kg) and boilers for Krishnapatnam UMPP will be designed accordingly.
Management has guided for commissioning of first unit by September 2013.
` Tilaiya UMPP (3,960 MW) the project is yet to achieve financial closure. Management
has indicated that production from Tilaiya coal block will likely commence by 2013. Peak
production from the project will be 40 mtpa, part of which will be used to fuel expansion
at Tilaiya.
` Chitrangi (3,960 MW) the project is yet to achieve financial closure and acquire the
entire land for the plant. Project will use excess coal from captive coal blocks allocated for
Sasan UMPP. Management has guided for commissioning of first unit by September 2013.
Exhibit 4: Progress on UMPPs have been sedate with both Sasan and Krishnapatnam missing original commissioning guidance
Execution status of near-term projects of RPWR
Project
Rosa II
Capacity
(MW)
600
Butibori
600
Land
Fuel
Enviroment
clearance
Financial
Closure
EPC
award
D
D
D
D
D
D
D
D
D
D
D
D
D
D
D
D
D
D
WIP
D
D
D
U
U
Sasan
3,960
WIP
Krishnapatnam
4,000
WIP
Chitrangi
3,960
WIP
Tilaya
4,000
WIP
Expected
CoD
Mar-12
Jun-12
Jun-13
Jul-15
Jul-14
Jun-17
13
Utilities
Reliance Power
Exhibit 5: Profit model, balance sheet, cash model of RPWR, March fiscal year-ends, 2009-2013E (Rs
mn)
2009
2010
2011E
2012E
2013E
(1,031)
3,604
(2)
2,570
(119)
2,445
2,445
1.1
207
(1,073)
8,227
(70)
(57)
7,026
(187)
6,839
6,839
2.9
11,530
3,016
8,961
(2,219)
(798)
8,960
(310)
(639)
1
8,011
8,011
2.9
41,890
15,918
10,125
(5,934)
(4,770)
15,339
(1,542)
(2,286)
(421)
11,090
11,090
4.0
121,541
43,734
5,085
(22,033)
(14,823)
11,963
(2,665)
(1,171)
(1,103)
7,024
7,024
2.5
Balance sheet
Paid-up common stock
Total shareholders' equity
Deferred taxation liability
Minority interest
Total borrowings
Total liabilities and equity
Net fixed assets
Capital work-in progress
Investments
Cash
Net current assets (excl. cash)
Net current assets (incl. cash)
Total assets
23,968
137,791
13,325
151,116
2,879
46,780
103,172
216
(1,931)
(1,715)
151,116
23,968
144,630
22,406
167,037
23,408
68,029
79,152
1,338
(4,890)
(3,552)
167,037
28,051
167,294
689
1,679
415,223
584,885
100,160
432,280
42,386
10,059
52,445
584,885
28,051
178,384
2,975
2,100
493,229
676,688
238,153
398,568
22,491
17,475
39,966
676,688
28,051
185,408
4,146
3,203
535,197
727,954
569,471
126,960
5,341
26,181
31,523
727,954
Free cash flow

Operating cash flow, excl. working capital
Capital expenditure
Free cash flow
2,447
(4,065)
(39,351)
(40,969)
6,896
2,959
(41,835)
(31,979)
9,447
(14,950)
(441,801)
(447,303)
18,567
(7,416)
(109,051)
(97,900)
24,121
(8,706)
(74,533)
(59,118)
10
1.8
57.5
15
4.8
60.3
4.3
221
5.1
59.9
2.7
261
6.4
64.7
2.5
281
3.9
67.6
3.3
Profit model
Net revenues
EBITDA
Other income
Interest (expense)/income
Depreciation
Pretax profits
Tax
Deferred taxation
Minority interest
Net income
Extraordinary items
Reported profit
Earnings per share (Rs)
Ratios
Net debt/equity (%)
Return on equity (%)
Book value per share (Rs)
ROCE (%)
14
BUY
IVRCL (IVRC)
Construction
FEBRUARY 15, 2011

RESULT
Coverage view: Attractive
Revenue and EBITDA gains nullified by interest cost and depreciation. IVRCL
delivered reasonable revenues growth of 15% yoy in 3QFY11, however, higher interest
cost and depreciation led to flat PAT yoy. The management reduced FY2011 revenue
guidance to Rs62.5 bn (may still be aggressive as we build Rs58.2 bn). Debt and
working capital remain stable on a qoq basis, a partial tie up of equity for BOT assets
may help push execution as concession agreement, land, financial closure make
progress. Retain BUY as stock trades at 4X FY2012E P/E adj. for equity holdings.
IVRCL
Stock data
195-60
Market Cap. (Rs bn)
19.2
Promoters
9.5
FIIs
57.7
MFs
7.9
1M
3M
12M
Absolute
(34.5) (48.4) (54.7)
Rel. to BSE-30
(32.1) (42.9) (59.8)
EPS (Rs)
EPS growth (%)
P/E (X)
Sales (Rs bn)
Net profits (Rs bn)
EBITDA (Rs bn)
EV/EBITDA (X)
ROE (%)
Div. Yield (%)
2011
7.0
(11.7)
10.3
58.3
1.9
5.5
7.0
9.6
0.6
2012E
8.9
28.1
8.0
72.7
2.4
6.9
6.0
11.2
0.6
2013E
12.6
40.7
5.7
92.5
3.4
8.8
4.9
13.9
0.6
Reasonable revenue growth nullified by higher interest cost and depreciation

IVRCL reported revenues of Rs14.2 bn (up 15% yoy) and EBITDA margins of 9.9% (up 90 bps yoy)
led by lower raw material cost as a percentage of sales. The net profit line disappointed though,
led by higher interest cost of Rs592 mn (vs Rs372 mn last year and Rs480 mn in 2QFY11) and
depreciation cost of Rs199 mn (up 43% yoy) led to flat PAT of Rs423 mn. For 9MFY11, revenues
are Rs36 bn and EBITDA margin at 9.3% are flat yoy with higher interest cost and depreciation
increase leading to decline in PAT of 26%.
Price (Rs): 72
BSE-30: 18,202
QUICK NUMBERS
Revenues at Rs14.2
bn up 15% yoy
EBITDA margins
expands 90 bps yoy
to 9.9%
Net PAT at Rs423
mn flat yoy due to
interest cost (up
59% yoy) and
depreciation (up
43% yoy)
Revises full year guidance of Rs62.5 bn; we build in full year revenues of Rs58.2 bn
The management reduced the FY11 revenues guidance to Rs62.5 bn. The present guidance still
implies a strong growth of 35% in the last quarter. We believe this would be difficult to achieve
and have built in FY2011E revenues of Rs58.2 bn, implying yoy revenue growth of 18% in 4QFY11.
Equity for BOTs partly tied upmay scale up execution; IVRCL parent not to invest directly
Present portfolio of IVRCL Assets BOT projects requires incremental equity of about Rs13.5 bn.
Funds up to Rs6.5 bn are already tied up through (1) issue of compulsorily convertible debentures
of Rs2.5 bn to IFCI (2) Rs1.5 bn investment from UTI and (3) Rs2.5 bn NCDs. The rest are to be
funded from the stake sale of existing and upcoming BOT projects, land sales as well as equity
dilution in IVR Prime. IVRCL Infra. as a parent entity is not likely to invest in IVR Prime to fund the
equity of BOT projects.
Revise est. on back of higher interest cost; retain BUY on valuation, visibility and likely pick up
We have revised our FY2011E, FY2012E and FY2013E estimate to Rs7 (Rs7.7 earlier), Rs8.9
(Rs10.3 earlier) and Rs12.6 (Rs15.7) primarily based on higher interest cost versus earlier estimates.
We have revised our target price to Rs125 from Rs190 earlier based on (1) using 10X multiple now
versus 13X earlier, (2) lower valuation of listed subsidiaries (Rs20 impact) and (c) reduction in
earnings estimates. We retain our BUY rating as (1) execution of road projects may pick up as a
part of equity gets tied up, and agreements and financial closures are completed, (2) attractive
valuation 4X FY2012E P/E adjusted for equity holdings in IVR Prime and HDO, (3) order book
visibility.
Construction
IVRCL
Result disappoint on interest cost and depreciation

IVRCL reported revenues of Rs14.2 bn, up 15% yoy. The company reported EBITDA margin
of 9.9%, up 90 bps yoy (9.0% in 3QFY10) and marginally better than our estimates of 9.5%.
The margin expansion was led by lower raw material cost as a percentage of sales. The
revenue and margin gains resulted in 26% yoy EBITDA growth to Rs1404 mn. IVRCL
disappointed on interest cost and depreciation leading to a net PAT of Rs433 mn, down 1%
yoy and 3.3% below our estimate of Rs437 mn. Interest cost increased 59% yoy to Rs592
mn due to the interest rate increase. Depreciation also increased significantly by 43% to
Rs199 mn.
For the nine months ending December 31, 2010, IVRCL reported flat revenues of Rs36 bn
and EBITDA of Rs3.36 bn. As in 3QFY11, the company disappointed on below EBITDA line
items leading to 9MFY11 net PAT contraction of 26% to Rs937 mn.
Revenue and EBITDA margins gains nullified by higher interest cost and depreciation
IVRCL - 3QFY11 - key numbers (Rs mn)
Net Sales
CoGS
Constrn, stores & spares
Subcontracting exp.
Masonry & labour
Staff cost
Other expenditure
Expenditure
EBITDA
Other income
PBIDT
Interest
Depreciation
Profit before tax
Tax
Profit after tax
3QFY11 3QFY11E
14,188
13,199
(11,769)
(5,325)
(1,894)
(4,551)
(604)
(411)
(12,784) (11,945)
1,404
1,254
11
54
1,415
1,308
(592)
(486)
(199)
(170)
625
653
(202)
(215)
423
437
3QFY10
12,347
(10,498)
(4,263)
(2,563)
(3,672)
(479)
(256)
(11,233)
1,115
39
1,153
(372)
(139)
643
(216)
427
2QFY11
10,750
(8,812)
(4,095)
(1,684)
(3,033)
(633)
(352)
(9,797)
953
57
1,010
(480)
(184)
345
(112)
233
Order book
Order backlog
Order booking
242,000
16,188
173,428
41,275
240,000
53,450
85.0
3.9
2.1
9.0
5.2
3.5
33.6
82.0
5.9
3.3
8.9
3.2
2.2
32.6
Key ratios (%)

CoGS/Sales
Staff cost/sales
Other expenditure/sales
EBITDA margin
PBT Margin
Net Profit margin
Effective tax rate
83.0
4.3
2.9
9.9
4.4
3.0
32.3
9.5
4.9
3.3
33.0
% change
yoy
14.9
12.1
24.9
(26.1)
23.9
26.1
60.6
7.0
13.8
12.0
26.0
(79.3)
(71.2)
8.2
22.7
21.8
59.0
17.2
43.3
(4.3)
(2.8)
(6.4)
(6.6)
(3.3)
(0.9)
vs est.
7.5
39.5
(60.8)
qoq
32.0
33.6
30.0
12.4
50.0
(4.6)
16.9
30.5
47.3
(80.2)
40.1
23.2
7.9
80.9
79.4
81.7
0.8
(69.7)
9MFY11
36,002
(29,703)
(13,026)
(5,479)
(11,198)
(1,888)
(1,045)
(32,637)
3,365
76
3,442
(1,525)
(540)
1,376
(440)
937
82.5
5.2
2.9
9.3
3.8
2.6
31.9
9MFY10
35,386
(30,158)
(13,311)
(7,271)
(9,576)
(1,299)
(673)
(32,130)
3,255
135
3,390
(1,115)
(401)
1,874
(608)
1,265
% change
1.7
(1.5)
(2.1)
(24.6)
16.9
45.3
55.4
1.6
3.4
(43.5)
1.5
36.8
34.7
(26.6)
(27.8)
(26.0)
#DIV/0!
#DIV/0!
85.2
3.7
1.9
9.2
5.3
3.6
32.5
Source: Company, Kotak Institutional Equities
Road projects execution slow as some projects may be just getting ready for
execution now
The slowdown in execution of the roads segment projects is reflected in the revenue
contribution of this segment (transportation segment) of 12% of the total 9MFY11 revenues
versus a backlog contribution of about 27%. We believe water resources and irrigation
segments have contributed their fair share to the revenues (equal revenue and backlog
contribution) while the buildings segment has recorded a strong revenue contribution of
about 24% versus a backlog contribution of 19%.
16
IVRCL
Construction
Segment wise break-up of IVRCL's order book and revenues for 1HFY11
9MFY11 revenues (Rs36 bn)
9MFY11-end backlog (Rs242 bn)

Oil & Gas
1%
Electrical
7%
Oil & Gas

14%
Water resources
46%
Water resources
46%
Electrical
4%
Buildings and
Industrial
19%
Transportation
27%
Strong buildings segment revenue

contribution versus backlog
contribution of 19%
Buildings and
Industrial
24%
Transportation
12%
Low revenue contribution

from roads segment
versus backlog share
Recently signed concession agreements for two BOT projects; Goa still remaining
The company has signed concession agreements for two of the three recent BOT project
wins viz. (1) Rs15 bn Sion-Panvel expressway (won in Sept-2010- financial closure likely to
happen soon) and (2) Rs7.5 bn Karanji-Wani-Ghuggus-Chandrapur road (won in Sept-2010
financial closure likely to happen soon). The Rs31 bn Maharashtra-Goa project (won in
June-2010) is still awaiting concession agreement and financial closure.
Sion-Panvel and Karanji-Chadrapur concession agreements signed in 3QFY11
Key details of existing and recent BOT project wins of IVRCL
Sion-Panvel
Expressway
Concession agreement yet to be signed
25 kms of a 10-lane
concrete expressway from
Sion to Panvel
Project Description
Company's share
51%
Other partners
Kakade Infra.
4 laning of Karanji - Wani

- Ghuggus - Chandrapur
highway
100%
NA
4/6 laning of 122 km

from Mah/Goa border to
Goa/Kar border
100%
NA
Project Type
Concession Period
Construction period
Toll
30 years
2 years
Toll
23 years
3 years
Positive grant of
Rs6,647.2 mn
Toll
18 years and 9 months
Grant structure
No grant
Concession agreement
signed, financial closure
expected soon
Project status
Estimated Funding structure (in Rs mn)
Total project Cost
14,500
Equity
3,000
Debt
7,600
Grant
3,900
IVRCL's Equity Commitment
1,530
Karanji - Wani Mah/Goa border to

Ghuggus - Chandrapur Goa/Kar border
Rs2,318.4 mn VGF
Concession agreement
signed, financial closure
expected soon
7,500
1,295
3,886
2,318
1,295
Concession agreement to
be signed
31,000
7,170
6,647
2,318
7,170
17
Construction
IVRCL
Construction work has begun on several financially closed BOT projects including BaramatiPhaltan, Chengapalli- Walayar and Indore-Gujarat.
Key details of completed and financially closed BOT projects of IVRCL
JallandharAmristar
Completed/ Financially closed projects
4 laning of 49 km
JallandharProject Description
Amristar stretch
Company's share
100%
Other partners
Project Type
Concession Period
Construction period
Grant structure
Toll
17.5 years
2.5 years
Positive grant of
Rs 330 mn
Project status
Operational
Estimated Funding structure (in Rs mn)
Total project Cost
3,430
Equity
671
Debt
2,365
Grant
395
IVRCL's Equity
671
Salem Kumarapalayam
Kumarapalayam
Chenagmpalli
Chennai
Water
BaramatiPhaltan
47 km from
53 km from Salem Kumarapalayam to
to Kumarapalayam Chengapalli
100 MLD
100%
100%
75%
Befesa
Chengapalli Indore-Gujarat Walayar
IOCL-tankage
4-laning of 78 km
Baramati-Phaltan- Construction of
Shirwal
12 tanks
75%
37.5%
155 km Indore
to Gujarat/MP
border
100%
NA
6-lanning of 42
km ChengapalliWalayar stretch
100%
NA
Two part
Toll
tariff
20 years
3 years
Positive grant of Rs
1290 mn
Toll
25 years
Annuity - (Rs350
mn per month)
Toll
15 years
27 years
Positive grant of
Rs1,220 mn
No grant
Rs230 mn
revenue share
Operational
Operational
Operational
25-27%
construction
completed
65%
construction
completed
Financial closure 7% construction

achieved
completed
5,020
800
2,930
1,290
800
4,215
650
3,390
175
650
5,680
1,730
3,950
3,820
700
1,900
1,220
525
30,000
2,250
2,250 -Sponser
25,500 - Senior
844
15,200
3,800
11,400
3,800
Toll
20 years
2 years
Positive grant of Rs
175 mn
1,297
Toll
25 years
Rs360 mn
revenue share
11,250
4,250
7,000
4,250
Order inflows just keeping pace; current backlog and its execution holds the key
The company reported an order backlog of Rs242 bn at end- 3QFY11 leading to an order
booking of about Rs16 bn in this quarter. The order backlog provides a revenue visibility of
about 3.4 years based on forward four quarter revenues.
Order book visibility at about three years based on forward four quarter revenues
Order backlog, booking and visibility (X) of IVRCL Infrastructure, March fiscal year-ends, 2002-3QFY11
Order Backlog (LHS)
(Rs bn)
280
Order Booking (LHS)
Visibility (RHS)
(years)
3.8
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
1Q10
4Q09
3Q09
2Q09
0.2
1Q09
40
4Q08
0.8
3Q08
80
2Q08
1.4
1Q08
120
FY07
2.0
FY06
160
FY05
2.6
FY04
200
FY03
3.2
FY02
240
(0.4)
18
IVRCL
Construction
Reduced full-year revenue guidance of Rs62.5 bn requires strong growth in 4Q

The management reduced the FY11 revenues guidance to Rs62.5 bn vs. earlier guidance of
Rs67.5-71 bn. The present guidance still implies 4QFY11 revenue of Rs26.5 bn and a strong
yoy growth of 35.6%. We highlight that the company had booked revenues of Rs18.9 in
4QFY10 which was the strongest quarter in the year.
We have built in revenues of Rs58.2 bn implying 17% yoy growth in 4QFY11E. Our full-year
margin assumption of 9.5% implies an EBITDA margin requirement of 9.8% in 4QFY11E
relatively flat on a yoy basis. Full-year PAT of Rs2 bn implies a net PAT of Rs930 mn in
4QFY11E versus Rs850 mn in 4QFY10.
IVRCL - 4QFY11E - implied key numbers (Rs mn)
Net Sales
Expenditure
EBITDA
Other income
Interest
Depreciation
PBT
Tax
PAT
Order book
Order booking
Key ratios (%)
EBITDA margin
PBT margin
Net PAT margin
Effective tax rate
9MFY11 9MFY10 % chg.

36,002
35,386
1.7
(32,637) (32,130)
1.6
3,365
3,255
3.4
76
135
(43.5)
(1,525)
(1,115)
36.8
(540)
(401)
34.7
1,376
1,874
(26.6)
(440)
(608)
(27.8)
937
1,265
(26.0)
9.3
3.8
2.6
31.9
NA
9.2
5.3
3.6
32.5
4QFY11E
22,262
(20,092)
2,170
60
(625)
(190)
1,415
(487)
928
4QFY10 % chg.
19,537
13.9
(17,480)
14.9
2,058
5.5
20
202.4
(523)
19.5
(142)
34.1
1,412
0.2
(569)
(14.4)
844
10.0
FY2011E
58,265
(52,730)
5,535
136
(2,150)
(730)
2,791
(927)
1,864
FY2010 % chg.
54,923
6.1
(49,610)
6.3
5,313
4.2
155
(12.0)
(1,639)
31.2
(543)
34.5
3,286
(15.1)
(1,177)
(21.3)
2,109
(11.6)
NA
98,501
103,556
98,501
9.7
6.4
4.2
34.4
10.5
7.2
4.3
40.3
9.5
4.8
3.2
33.2
9.7
6.0
3.8
35.8
NA
5.1
Needs Rs13.5 bn of equity funding for road projects; may sell equity stake in
BOT projects
Present portfolio of IVRCL Assets BOT projects requires incremental equity of about Rs13.5
bn. Delays/difficulties in raising this equity would potentially lead to lower construction
revenues and/or may put stress on the standalone balance sheet. Funds up to Rs6.5 bn are
already tied up through (1) issue of compulsorily convertible debentures of Rs2.5 bn to IFCI
and (2) investment from UTI for about Rs1.5 bn and (3) issue of NCDs for a total of about
Rs2.5 bn. The rest are to be funded from stake sale of existing and upcoming BOT projects,
land sales etc. IVRCL Infrastructure as a parent entity is not envisaged to invest in equity of
BOT projects help in IVR Prime.
Debt and working capital remain stable on a qoq basis

IVRCL management indicated net debt at end-Dec 2010 of about Rs22 bn versus Rs21.2 bn
at end-Sept 2010 and Rs15.5 bn at FY2010-end level. The increase in debt levels was
primarily due to higher loans & advances to subsidiaries for investment in the BOT assets.
Loans and advances towards subsidiaries stood at about Rs4.5 bn versus end-FY2010 level
of about Rs2.8 bn. We have built in debt levels of about Rs23 bn at end-FY2011E.
19
Construction
IVRCL
Revise earnings estimates and target price to Rs125/share; retain BUY

We have revised our FY2011E, FY2012E and FY2013E estimate to Rs7 (Rs7.7 earlier), Rs8.9
(Rs10.3 earlier) and Rs12.6 (Rs15.7) earlier primarily based on higher interest cost versus
earlier estimates. We have revised our target price to Rs125 from Rs190 earlier based on (1)
using 10X multiple now versus 13X earlier (Rs30 impact on the target price), (2) lower
valuation of listed subsidiaries IVR Prime and Hindustan Dorr Oliver (Rs20 impact on the
target price) and (3) reduction in earnings estimates (Rs20 impact on the target price).
Revised estimates for IVRCL, March fiscal year-ends, 2011E-12E (Rs mn)
Revenues
EBIDTA
EBITDA margin (%)
PAT
EPS (Rs)
yoy growth (%)
Revenus
EBITDA
PAT
EPS
New estimates
FY2011E
FY2012E
58,265
72,655
5,535
6,902
9.5
9.5
1,864
2,389
7.0
8.9
6.1
4.2
(11.7)
(11.7)
24.7
24.7
28.1
28.1
Old estimates
FY2011E
FY2012E
58,664
74,642
5,573
7,091
9.5
9.5
2,063
2,759
7.7
10.3
6.8
(42.4)
(2.3)
(2.3)
% revision
FY2011E
FY2012E
(0.7)
(2.7)
(0.7)
(2.7)
(9.6)
(9.6)
(13.4)
(13.4)
27.2
(38.0)
33.7
33.7
Source: Company estimates, Kotak Institutional Equities estimates
We retain BUY as (1) execution of road projects may pick up as part of equity gets tied up,
and agreements and financial closures are completed, (2) attractive valuation 4X FY2012E
P/E adjusted for equity holdings in IVR Prime and HDO, (3) order book visibility.
20
IVRCL
Construction
Key order booking and execution segmental assumptions for IVRCL (standalone), March fiscal
yearends,2008-13E (Rs mn)
IVRCL Construction
Orders received
Revenues
Growth (%)
Order backlog - year end
Bill to book ratio
Segmental
Water resources and irrigation
Orders received
Growth (%)
Revenues
Growth (%)
Bill to book ratio
Transportation
Orders received
Growth (%)
Revenues
Growth (%)
Bill to book ratio
Buildings
Orders received
Growth (%)
Revenues
Growth (%)
Bill to book ratio
Electrical
Orders received
Growth (%)
Revenues
Growth (%)
Bill to book ratio
2008
2009
2010
2011E
2012E
2013E
87,967
36,622
59.5
122,415
31.8
63,229
48,819
33.3
136,825
31.7
136,175
56,000
14.7
217,000
27.3
103,556
58,265
4.0
262,292
21.7
101,252
72,655
24.7
290,889
23.2
116,340
92,542
27.4
314,688
26.5
58,272
181.1
17,824
52.0
75,728
27.7
44,209
(24.1)
25,874
45.2
94,063
26.4
39,937
(9.7)
26,000
0.5
108,000
22.8
39,937
25,594
(1.6)
122,343
20.0
39,937
32,020
25.1
130,260
22.5
45,927
15.0
38,306
19.6
137,881
25.0
440
(80.3)
6,933
115.3
11,157
38.8
1,583
259.9
6,346
(8.5)
6,394
53.1
53,606
7,000
10.3
53,000
32,164
(40.0)
8,635
23.4
76,528
25,731
20
13,409
55.3
88,850
21.1
12.5
15.0
29,591
15.0
23,320
73.9
95,121
22.5
25,410
445.9
6,935
77.4
28,015
31.2
12,304
(51.6)
10,252
47.8
30,067
30.0
15,933
29.5
11,000
7.3
35,000
28.9
17,526
10.0
14,661
33.3
37,866
33.5
20,155
15.0
15,582
6.3
42,439
32.5
23,178
15.0
17,559
12.7
48,058
32.5
3,845
(58.8)
4,930
20.2
7,515
46.9
5,132
33.5
6,346
28.7
6,301
63.0
12,700
147.5
5,000
(21.2)
14,000
39.5
11,430
(10.0)
6,900
38.0
18,529
35.0
11,430
8,485
23.0
21,473
35.0
13,144
15.0
9,816
15.7
24,802
35.0
We correspondingly revise our SOTP-based target price to Rs125/share from Rs190/share.

Our target price of Rs125/share is comprised of (1) Rs90/share from the core construction
business based on 10XFY2012E earnings, (2) IVRCL Assets contribution of Rs26/share, and
(3) Rs10/share contribution from Hindustan Dorr Oliver.
We arrive at an SOTP-based target price of Rs125/share for IVRCL
Project/ Business
Value of core construction business
Value of Hindustan Dorr Oliver
Value of IVRCL Prime Developers Ltd
Total
Valuation
(Rs mn) Rs/ share
24,156
89
2,697
10
6,921
26
125
Valuation methodology
# P/E multiple of 10X FY2012E earnings
# Discount to market price
# Discount to market price
#
21
Construction
IVRCL
Profit model and balance sheet of IVRCL, March fiscal year-ends, 2007-13E (Rs mn)
2007
2008
2009
2010E
2011E
2012E
2013E
Income statement
Operating Income
Operating Expenses
EBITDA
Other Income
Interest & Finance charges
Depreciation
Profit Before Tax
Tax expense
PAT
EPS (Rs)
23,059
(19,497)
2,301
74
(308)
(216)
1,851
(436)
1,415
10.9
36,606
(30,965)
3,544
45
(407)
(328)
2,853
(749)
2,105
15.8
48,819
(41,772)
4,145
299
(1,233)
(473)
2,738
(478)
2,260
16.9
54,923
(46,281)
5,313
155
(1,637)
(543)
3,288
(1,177)
2,111
7.9
58,265
(49,525)
5,535
136
(2,150)
(730)
2,791
(927)
1,864
7.0
72,655
(61,975)
6,902
148
(2,611)
(863)
3,576
(1,187)
2,389
8.9
92,542
(78,938)
8,791
160
(2,913)
(1,007)
5,032
(1,671)
3,361
12.6
Balance sheet
Total share holders funds
Share Capital
Reserves & Surplus
Loan Funds
Working Capital Loan
Long term
Total Sources of Funds
Net fixed assets
Net block
Capital WIP
Investments
Net Current Assets (excl Cash)
Cash and Bank Balances
Total
13,217
259
12,918
5,561
2,864
1,580
18,834
2,435
1,929
506
2,829
11,332
2,238
18,834
16,060
267
15,789
10,678
5,215
5,159
26,841
3,733
3,192
541
3,409
17,928
1,772
26,841
18,106
267
17,839
13,980
7,645
3,949
32,203
5,403
5,207
196
3,892
21,900
1,009
32,203
18,533
534
17,999
16,133
9,103
3,489
34,791
6,017
5,664
353
6,138
20,992
1,644
34,791
20,276
534
19,742
22,883
22,542
43,159
6,684
6,434
250
5,910
27,381
3,184
43,159
22,544
534
22,010
24,883
24,542
47,427
7,321
7,071
250
6,210
30,989
2,907
47,427
25,784
534
25,250
27,383
27,042
53,168
8,064
7,814
250
6,210
35,139
3,755
53,168
Free cash flow

Net cashflow from operating activites
Net PBT
Add: Depreciation
Add: Financial Charges
Tax paid
Change in wcap.
Cash flow from investing activities
Free cash flow
(4,340)
1,851
216
308
(399)
(6,316)
(1,407)
(5,747)
(3,657)
2,853
328
407
(650)
(6,596)
(2,264)
(5,922)
22
2,738
473
1,233
(449)
(3,972)
(2,611)
(2,589)
5,213
3,288
543
1,637
(1,162)
908
(5,087)
127
(1,769)
2,791
730
2,150
(1,051)
(6,390)
(1,169)
(2,938)
2,255
3,576
863
2,611
(1,187)
(3,608)
(1,800)
455
3,131
5,032
1,007
2,913
(1,671)
(4,150)
(1,750)
1,381
10.0
6.1
0.4
0.3
15.7
10.7
9.7
5.7
0.7
0.6
14.4
10.4
8.5
4.6
0.8
0.7
13.2
10.5
9.7
3.8
0.9
0.8
11.5
9.6
9.5
3.2
1.1
1.0
9.6
8.5
9.5
3.3
1.1
1.0
11.2
9.1
9.5
3.6
1.1
0.9
13.9
10.6
Key ratios
EBITDA margin (%)
PAT margin (%)
Debt/ equity (X)
Net debt/ equity (X)
ROAE (%)
ROACE (%)
Source: Kotak Institutional Equities
22
REDUCE
Jubilant Life Sciences (JOL)

Pharmaceuticals
FEBRUARY 16, 2011

RESULT, CHANGE IN RECO.
Coverage view: Cautious
Disappointing quarter. While sales were in line, EBITDA margin at 15.4% was down
350 bps qoq and below our est. of 18% due to (1) steep margin dip in services business
and (2) sequential decline of around 150 bps in margin of products business (80% of
sales) which is perplexing, given (1) 7% qoq increase in its sales, (2) sequential
improvement in selling pricing and (3) adequate raw material inventory. We cut our
FY2011-12E est. by 16-30% to account for (1) acute margin pressure the business is
facing and (2) poor revenue generation (5% in 9MFY11 excl. one-time H1N1 business
last year) and (3) increase in interest cost on account of FCCB repayment in May 2011E.
We downgrade to REDUCE with PT of Rs220 (from Rs350), 13X FY2012E.
Price (Rs): 193

Jubilant Life Sciences
Stock data
406-185
Market Cap. (Rs bn)
30.7
Promoters
47.3
FIIs
25.5
MFs
5.9
1M
3M
12M
Absolute
(25.1) (36.4) (39.9)
Rel. to BSE-30
(22.7) (29.3) (47.2)
QUICK NUMBERS
EPS (Rs)
EPS growth (%)
P/E (X)
Sales (Rs bn)
Net profits (Rs bn)
EBITDA (Rs bn)
EV/EBITDA (X)
ROE (%)
Div. Yield (%)
2010
26.5
49.0
7.3
37.8
4.5
8.3
6.6
26.3
1.0
2011E
14.6
(45.1)
13.3
34.5
2.6
5.8
10.1
11.9
1.0
2012E
16.9
15.9
11.4
38.7
2.7
7.0
8.2
12.1
1.3
3QFY11 revenues up 2% qoq, in line with our estimate

Sales at Rs8.7 bn were in line with our estimate with (1) services business (19% of sales)
underperforming, down 14% qoq due to delay in customer approvals in CMO business and delay
in milestone fees and (2) products business of lifecycle ingredients/generics was higher than our
est. by 5% and up 13% yoy with volume growth at 17%, indicating pricing pressure still remains
despite price improvement sequentially.

BSE-30: 18,274
We downgrade to
REDUCE with PT of
Rs220 (from Rs350),
13X FY2012E
3QFY11 revenues,
up 2% qoq, in line
with our estimate
EBITDA margin at
15% was lower
than our estimate
of 18% and down
360 bps qoq
EBITDA margin at 15% was lower than our estimate of 18% and down 350 bps qoq
EBITDA margin excluding other income was down 350 bps qoq to 15% on account of (1) negative
margin in services business in 3QFY11 versus 2.6% in 9MFY11 due to postponement of milestone
income and (2) lower margin in products business at 22.8% in 3QFY11 versus 23.3% in 9MFY11,
implying that pricing pressure in pyridine and chemicals business still remains. This is despite this
business witnessing (1) 7% qoq increase in sales, (2) sequential improvement in selling pricing and
(3) adequate raw material inventory.
We cut our FY2011-12E est. by 16-30%
We cut our FY2011-12E est. by 16-30% to account for (1) acute margin pressure faced by the
services business. Our analysis shows EBITDA margin in services business excl. high-margin contract
of H1N1 was 10-12% in 9MFY10 which has collapsed to 3% in 9MFY11. We believe steady state
margin of 16-18% outlined by Jubilant is contingent upon healthy revenue generation, which has
not been seen YTD, with DDDS facing sales dip of 20% in 9MFY11 and sequential decline in CMO
business in 3QFY11, (2) poor revenue generation (5% in 9MFY11 excl. one-time H1N1 business)
and (3) increase in interest cost on account of inc. in debt to repay FFCB in May 2011E.
We downgrade to REDUCE from BUY with PT of Rs220 (from Rs350), 13X FY2012E
We believe the key revenue drivers are some time away(1) new launches in APIs, the two major
sartans Jubilant has filed DMF for expire only in 2012E and (2) revenue generation from capacity in
pyridines is likely in 2HFY12-13E.
Pharmaceuticals
Interim results- Jubilant, March fiscal year-ends (Rs mn)
Net sales
Change in stock
Cost of trading goods sold
RM consumed
Stores, spares
Mfg exp
Staff cost
Selling exp
Exchange loss/(gain)
Total Expenditure
EBITDA
EBITDA, %
Other income
Interest
Depreciation
PBT
Tax
PAT
Minority interest
PAT before exceptional
Exceptional item
PAT
Lifescience ingredients
Generics
CMO
Drugs discovery & development
Hospitals
Total
3,102
549
710
1,790
870
(570)
6,450
2,200
25.4
100
390
310
1,600
200
1400
30
1,370
(420)
950
2QFY11
8,500
(95)
499
2,778
522
673
1,789
756
7
6,929
1,571
18.5
73
221
488
934
42
892
(5)
897
(7)
891
3QFY11E
1
NM
NM
(18)
11
2
(4)
23
NM
6
(17)
(3)
(58)
(5)
(1)
(36)
(17)
(39)
NM
(38)
NM
(41)
% change
3QFY10
0
NM
NM
(14)
4
(1)
(1)
(3)
NM
14
(41)
(10)
(58)
(27)
59
(65)
(46)
(68)
NM
(66)
NM
(54)
2QFY11
2
NM
46
(4)
9
4
(1)
11
NM
6
(17)
(4)
(43)
29
1
(40)
158
(49)
NM
(49)
NM
(50)
5,240
950
1,750
690
20
8,650
5,470
1,100
1,390
510
30
8,500
5
5
(17)
(1)
(17)
1
11
24
(34)
(29)
25
0
6
7
(17)
(4)
(17)
2
3QFY11
8,665
107
729
2,681
568
700
1,777
843
(35)
7,368
1,297
15.0
42
286
493
560
108
452
(8)
460
(19)
441
3QFY11E
8,553
3,250
513
684
1,850
684
6,982
1,571
18.4
100
300
500
871
131
740
(5)
745
745
3QFY10
8,650
5,820
1,180
1,150
490
25
8,665
5,517
1,121
1,391
493
30
8,553
Source: Kotak Institutional Equities estimates, Company
Revenue break-up (Rs mn)
LS Ingredients
Generics
Products
CMO
DDDS
Hospitals
Services
Total
Adjusted growth
9MFY10
15,630
2,820
18,450
9MFY11
16,600
3,270
19,870
%
6
16
8
FY2010
20,813
3,820
24,633
FY2011E
22,534
4,400
26,934
%
8
15
9
FY2012E
25,650
5,272
30,922
%
14
20
15
FY2013E
28,277
6,118
34,394
%
10
16
11
4,400
1,930
60
6,390
3,930
1,540
90
5,560
(11)
(20)
50
(13)
6,620
2,490
80
9,190
5,301
2,142
115
7,558
(20)
(14)
44
(18)
5,558
2,048
140
7,746
5
(4)
22
2
5,912
2,112
141
8,165
6
3
1
5
24,840
24,240
25,430
25,430
2
5
33,823
32,075
34,492
34,492
2
8
38,667
38,667
12
12
42,560
42,560
10
10
24
Pharmaceuticals
Sartans to add to revenues only from 2HFY12E
API
Esprosartan
Candesartan
Losartan
Valsartan
Olmesartan
Telmisartan
Irbesartan
Patent expiry
2014
Dec-12
4QFY11E
Sep-12
2016
2014
2011
Brand name
Teveten
Atancand
Hyzaar
Diovan
Benicar
Micardis
Avalide
Innovator
Abbott
Astrazeneca
Merck
Novartis
Daiichi
Boehringer
Sanofi
DMF filed
Y
Y
Y
Y
N
N
N
Genericised
N
N
Y
N
N
N
N
Source: US FDA
Debt and interest cost details (Rs mn)
FCCB
Debt in standalone (Rupee)
Debt in standalone (FC)
Debt in Sub (Rupee)
Debt in Sub (FC)
Gross debt
Cash
Net debt
Net debt/Equity
Interest cost calculation
Interest bearing debt (Rupee)
Interest bearing debt (FC)
Total interest bearing debt
Average interest rate (Rupee)
Average interest rate (FC)
Interest cost
Interest cost in P&L
Interest cost (%)
FY2009
9,750
9,331
6,190
600
12,910
38,781
6,530
32,251
2.5
FY2010
8,610
6,800
4,710
510
10,570
31,200
7,601
23,599
1.1
Sep-10
6,390
3,990
7,750
510
10,070
28,710
1,410
27,300
1.2
Dec-10
6,350
5,880
7,600
260
9,700
29,790
980
28,810
1.4
FY2011E
6,350
6,019
7,600
260
9,700
29,929
1,690
28,238
1.3
FY2012E
10,354
7,600
260
9,700
27,914
500
27,414
1.2
9,931
19,100
29,031
7,310
15,280
22,590
10.6%
3.8%
1,558
1,505
5.8%
4,500
17,820
22,320
8.9%
4.2%
6,140
17,300
23,440
9.0%
4.2%
4.9%
5.0%
6,279
17,300
23,579
8.9%
4.2%
1,292
1,028
4.4%
10,614
17,300
27,914
10.0%
4.5%
1,626
1,600
6.2%
25
Pharmaceuticals
Profit and loss statement, March fiscal year-ends, 2008-2013E (Rs mn)
2008
2009
2010
2011E
2012E
2013E
Net sales
24,889 35,175 37,812 34,492 38,667 42,560
Operating expenses
Materials
(13,834) (18,461) (20,024) (15,713) (16,578) (17,927)
Selling and administration
(1,458) (1,805) (3,520) (5,979) (6,907) (7,180)
Employee cost
(3,670) (6,575) (7,453) (7,254) (8,342) (9,594)
R&D
(228)
(285)
Others
(1,420) (3,629)
1,070
50
Total expenditure
(20,382) (30,469) (29,926) (28,897) (31,827) (34,701)
EBITDA
4,507
4,706
7,886
5,595
6,840
7,858
Depreciation and amortisation
(1,039) (1,632) (1,247) (1,970) (2,200) (2,400)
EBIT
3,468
3,074
6,639
3,625
4,640
5,458
Net finance cost
(337) (1,070) (1,505) (1,028) (1,600) (1,800)
Other income
1,430
425
373
226
200
200
Pretax profits before extra-ordinaries
4,561
2,428
5,507
2,824
3,240
3,858
Current tax
(557)
(623)
(957)
(299)
(583)
(695)
Deferred tax
12
127
Fringe benefit tax

(28)
(28)
Reported net profit

3,988
1,904
4,550
2,525
2,657
3,164
Minority interests
16
133
(5)
29
32
35
Reported net profit after minority inter 4,005
2,037
4,545
2,553
2,688
3,199
Exceptional items
790
(331)
(233)
PAT after minority interests and excep.

4,005
2,827
4,214
2,320
2,688
3,199
Balance sheet statement, March fiscal year-ends, 2008-2013E (Rs mn)
2008
Balance sheet
Net worth
Debt
Current liabilities
Deferred tax liabilities
Total equity and liabilities
Cash and cash equivalents
Current assets
Net assets incl CWIP
Investments
Total uses of funds
2011E
2012E
2013E
12,563 12,675 21,893 21,171

21,085 38,781 31,200 29,929
6,679 11,943 12,728 10,876
1,516
1,470
2,303
2,275
41,842 64,870 68,124 64,250
5,238
3,817
5,037
1,000
12,160 15,855 17,278 17,581
23,988 42,484 43,245 44,979
456
2,714
2,564
690
41,842 64,870 68,124 64,250
23,393
27,914
10,153
2,243
63,703
500
16,924
46,279
63,703
25,940
27,520
11,036
2,208
66,704
500
18,825
47,379
66,704
6,169
(160)
(3,500)
690
3,199
7,040
(1,205)
(3,500)
2,335
Free cash flow

Operating cash flow, excl. working 5,247
Working capital
(1,895)
Capital expenditure
(7,241)
Investments
(418)
Free cash flow
(4,306)
2009
4,218
1,553
(7,383)
(2,257)
(3,868)
2010
7,041
(752)
(2,011)
149
4,427
5,413
(2,157)
(3,704)
1,874
1,426
26
Kotak Institutional Equities: Valuation summary of key Indian companies

27
Company
15-Feb-11
Price (Rs)
Rating
Mkt cap.
(Rs mn)
(US$ mn)
O/S
shares
(mn)
2010
EPS (Rs)
2011E
2012E
EPS growth (%)

2010
2011E
2012E
2010
PER (X)
2011E
2012E
EV/EBITDA (X)
2010
2011E 2012E
Price/BV (X)
2010 2011E 2012E
Dividend yield (%)

2010 2011E 2012E
2010
RoE (%)
2011E
2012E
Target
price
Upside
(Rs)
(%)
ADVT-3mo
(US$ mn)
Automobiles
Ashok Leyland
Bajaj Auto
55
SELL
72,700
1,597
1,330
2.8
4.3
4.7
84.5
53.5
8.1
19.4
12.6
11.7
11.7
8.5
8.0
1.8
1.6
1.5
2.7
1.8
1.8
10.9
13.6
13.4
56
2.5
7.9
1,328
ADD
384,352
8,444
289
62.8
90.3
100.0
128.2
43.8
10.8
21.2
14.7
13.3
14.6
10.5
9.4
13.1
8.3
5.8
1.5
1.9
1.9
70.9
68.5
50.6
1,500
12.9
23.1
59.1
466.0
Bharat Forge
320
Hero Honda
1,517
Mahindra & Mahindra
668
239
0.7
12.4
19.7
(92.0)
1,705
11.3
7.7
4.9
3.6
3.0
6.1
8.5
16.4
405
26.4
4.1
REDUCE
ADD
302,945
6,655
200
111.8
97.8
109.8
73.9
(12.5)
12.3
13.6
15.5
13.8
8.2
9.5
8.0
8.4
6.3
4.8
2.0
2.0
2.0
59.0
45.0
39.5
1,485
(2.1)
34.0
BUY
410,891
76,593
9,027
1,683
615
35.1
42.8
47.7
133.6
22.1
11.6
19.1
15.6
25.8
14.0
16.2
13.4
23.9
10.9
9.6
5.1
3.8
3.1
1.3
1.4
1.5
30.0
27.6
24.5
800
19.8
35.9
Maruti Suzuki
1,237
BUY
357,295
7,849
289
86.4
78.4
91.8
105.0
(9.3)
17.0
14.3
15.8
13.5
7.5
8.0
6.6
3.0
2.5
2.1
0.5
0.4
0.5
23.3
17.4
17.3
1,460
18.1
9.8
Tata Motors
1,237
ADD
822,232
18,063
665
18.5
129.9
133.6
(141.1)
603.4
2.9
67.0
9.5
9.3
13.3
6.4
6.0
9.8
3.8
2.8
1.0
0.5
0.5
15.3
58.6
34.9
1,305
5.5
114.0
Automobiles
2,427,009
53,317
327.4
87.7
8.9
24.0
12.8
11.8
11.9
8.1
7.2
6.0
3.9
3.0
1.2
1.1
1.1
24.8
30.4
25.8
149
Cautious
BUY
72,168
1,585
485
21.6
25.9
28.0
60.1
20.2
8.2
6.9
5.7
5.3
1.6
1.4
1.1
3.4
4.0
4.4
26.0
25.8
23.4
190
27.7
4.7
1,275
BUY
516,516
11,347
405
62.1
81.7
99.9
22.7
31.6
22.3
20.5
15.6
12.8
3.2
2.8
2.4
0.9
1.2
1.5
19.2
19.1
20.1
1,600
25.5
58.3
83.7
108.0
Banks/Financial Institutions
Andhra Bank
Axis Bank
120.5
37.3
29.1
11.6
11.0
1.6
2.1
2.4
24.4
25.8
23.7
1,200
30.6
9.1
Bank of India
443
ADD
233,191
5,123
526
33.1
51.4
64.4
(42.1)
55.1
25.5
13.4
8.6
6.9
1.8
1.6
1.3
1.6
2.4
3.1
14.2
19.5
21.0
560
26.3
14.9
Canara Bank
Bank of Baroda
581
919
ADD
BUY
238,374
5,237
410
73.7
98.7
102.0
45.8
34.0
3.3
7.9
5.9
5.7
1.9
1.5
1.2
1.7
1.7
2.1
22.5
24.6
20.9
700
20.4
19.2
Corporation Bank
577
143
82.0
89.3
97.9
31.8
8.9
9.7
7.0
6.5
5.9
1.4
1.2
1.1
2.9
3.1
3.4
22.0
20.4
19.3
700
21.2
Federal Bank
385
ADD
65,839
1,446
171
27.2
34.3
44.5
(7.1)
26.3
29.7
14.2
11.2
8.6
1.4
1.3
1.2
1.3
1.6
2.1
10.3
11.9
14.0
450
16.9
5.9
HDFC
647
REDUCE
928,227
20,392
1,436
19.7
24.3
27.4
22.7
23.4
12.7
32.8
26.6
23.6
6.1
5.4
4.7
1.1
1.3
1.5
20.0
21.5
21.3
690
6.7
44.5
16.1
ADD
335,938
82,814
7,380
1,819
366
8.5
7.6
2.4
2.0
1.7
1.2
HDFC Bank
2,107
ADD
964,465
21,188
458
64.4
86.2
111.8
22.1
33.8
29.8
32.7
24.4
18.8
4.5
3.9
3.4
0.6
0.8
1.0
17.1
19.2
2,400
13.9
47.0
ICICI Bank
1,054
ADD
1,213,267
26,654
1,151
36.1
45.8
58.0
6.9
26.7
26.8
29.2
23.0
18.2
2.4
2.2
2.0
1.1
1.3
1.7
8.0
9.9
11.6
1,230
16.7
118.0
142
ADD
207,378
4,556
1,458
8.4
9.1
10.9
44.9
8.3
19.5
17.0
15.7
13.1
3.0
1.9
1.6
0.9
1.2
1.5
16.6
15.0
13.9
175
23.1
26.5
India Infoline
72
BUY
21,365
469
299
8.1
7.4
8.0
59.2
(9.0)
8.1
8.8
9.7
8.9
1.3
1.2
1.0
4.6
4.4
2.6
14.7
13.2
13.8
100
39.9
4.8
Indian Bank
218
ADD
93,883
2,062
430
35.1
37.9
43.5
25.5
8.1
14.6
6.2
5.8
5.0
1.4
1.2
1.0
3.0
3.1
3.6
24.1
21.7
21.0
320
46.5
2.9
Indian Overseas Bank
131
BUY
71,505
1,571
545
13.0
17.6
24.1
(46.7)
35.3
37.1
10.1
7.5
5.5
1.1
1.0
0.9
2.7
2.9
3.2
9.6
12.1
14.9
180
37.1
J&K Bank
773
ADD
37,482
823
48
105.7
123.5
136.6
25.0
16.9
10.6
7.3
6.3
5.7
1.3
1.1
1.0
2.8
3.3
3.7
18.2
18.5
17.8
850
10.0
1.0
LIC Housing Finance
191
ADD
90,525
1,989
475
13.9
19.3
21.4
11.5
38.5
10.9
13.7
9.9
8.9
2.8
2.2
1.9
1.6
2.2
2.4
23.6
24.6
22.8
206
8.1
74.7
IDFC
Oriental Bank of Commerce

PFC
Punjab National Bank
Reliance Capital
345
ADD
86,549
1,901
251
64.9
25.3
30.5
9.8
7.6
5.8
5.3
1.2
1.0
0.9
2.6
3.4
3.8
14.5
16.9
16.4
450
30.3
8.7
262
REDUCE
300,773
6,607
1,148
20.5
24.1
28.2
54.0
17.5
17.0
12.8
10.9
9.3
2.4
2.0
1.8
1.7
1.8
2.2
19.0
19.3
19.5
300
14.5
4.1
BUY
345,240
7,584
315
123.9
138.2
166.1
26.4
11.5
20.3
8.8
7.9
6.6
2.1
1.7
1.4
2.0
2.6
3.1
26.2
23.9
24.0
1,500
37.0
9.7
ADD
118,600
2,605
246
13.1
6.6
17.0
(66.7)
(49.8)
159.7
36.8
73.4
28.3
1.7
1.7
1.6
1.3
0.5
1.4
5.0
2.3
5.9
600
24.5
26.3
20.8
1,095
482
45.3
59.1
3.6
Rural Electrification Corp.
243
REDUCE
239,491
5,261
987
20.3
25.5
29.2
23.2
25.9
14.5
12.0
9.5
8.3
2.2
1.9
1.6
2.7
3.2
3.6
22.0
21.2
21.2
275
13.4
Shriram Transport
712
ADD
158,842
3,490
223
39.2
55.8
65.9
30.1
42.5
18.1
18.2
12.8
10.8
4.3
3.6
3.0
1.7
2.4
2.8
28.4
29.3
28.7
800
12.4
7.3
SKS Microfinance
640
REDUCE
47,124
1,035
74
26.9
24.2
36.5
61.1
(10.3)
50.9
23.7
26.5
17.5
5.0
2.5
2.2
21.7
12.6
13.5
700
9.5
15.9
SREI
5,105
112
116
8.3
7.9
9.9
17.8
(4.8)
25.8
5.3
5.6
4.4
12.3
3.8
BUY
1,737,547
38,171
635
144.4
175.2
225.2
0.5
21.3
28.6
19.0
15.6
12.2
2.6
2.3
2.0
1.1
1.2
1.2
14.8
15.8
17.7
3,400
24.2
213.3
341
BUY
172,296
3,785
505
41.1
40.9
53.8
20.2
(0.4)
31.6
8.3
8.3
6.3
2.0
1.6
1.3
1.6
1.6
2.1
26.2
21.4
23.3
420
23.1
5.3
Yes Bank
277
340
15.0
21.4
26.4
370
33.5
23.0
State Bank of India
44
Banks/Financial Institutions
BUY
Attractive
94,173
2,069
8,546,127
187,744
0.4
0.4
0.4
2.7
2.7
2.7
11.1
10.5
46.7
42.4
23.5
18.5
13.0
10.5
3.0
2.5
2.1
0.5
0.8
1.0
20.3
21.3
21.7
15.0
24.2
20.9
16.9
13.6
11.3
2.6
2.3
2.0
1.3
1.5
1.8
15.5
16.6
17.4
Cement
ACC
1,003
SELL
188,444
4,140
188
83.2
51.7
54.5
47.9
(37.9)
5.4
12.0
19.4
18.4
6.4
8.9
7.2
3.0
2.8
2.5
2.7
2.3
2.3
29.3
16.4
15.8
920
(8.3)
10.3
Ambuja Cements
119
SELL
181,467
3,987
1,522
8.0
7.9
7.9
11.4
(0.7)
(0.1)
14.9
15.0
15.0
8.2
7.9
7.0
2.6
2.3
2.1
1.6
1.7
1.9
19.3
16.8
15.0
108
(9.4)
4.9
Grasim Industries
2,309
ADD
211,671
4,650
92
301.0
224.3
261.1
26.1
(25.5)
16.4
7.7
10.3
8.8
4.6
5.3
4.1
1.7
1.5
1.3
1.4
1.5
1.5
22.9
15.4
15.7
2,600
12.6
India Cements
93
SELL
28,629
629
307
10.0
3.0
6.8
(43.5)
(70.5)
130.5
9.3
31.5
13.7
5.4
9.4
6.4
0.7
0.7
0.7
2.3
3.4
3.4
8.2
2.3
5.3
85
(8.8)
2.4
Shree Cement
1,641
REDUCE
57,161
1,256
35
208.0
84.0
161.7
19.0
(59.6)
92.6
7.9
19.5
10.1
3.9
6.7
3.7
3.1
2.8
2.3
0.6
0.6
0.6
48.0
15.2
25.0
1,680
2.4
0.6
946
REDUCE
259,226
5,695
274
88.2
42.3
79.7
1,030
8.9
6.9
Neutral
926,597
20,356
UltraTech Cement
Cement
Source: Company, Bloomberg, Kotak Institutional Equities estimates
12.0
(52.1)
88.6
10.7
22.4
11.9
12.5
10.0
5.8
4.8
2.2
1.8
0.3
0.4
0.4
25.9
11.9
19.3
19.3
(24.7)
31.2
12.1
16.0
12.2
6.4
7.4
5.4
2.5
2.0
1.7
1.4
1.4
1.4
20.6
12.3
14.2
3.3
India Daily Summary - February 16, 2011
NR
2,737
Union Bank

15-Feb-11
Price (Rs)
Rating
Mkt cap.
(Rs mn)
(US$ mn)
O/S
shares
(mn)
2010
EPS (Rs)
2011E
2012E
EPS growth (%)

2010
2011E
2012E
2010
PER (X)
2011E
2012E
EV/EBITDA (X)
2010
2011E 2012E
Price/BV (X)
2010 2011E 2012E
Dividend yield (%)

2010 2011E 2012E
2010
RoE (%)
2011E
2012E
Target
price
(Rs)
Upside
(%)
ADVT-3mo
(US$ mn)
Consumer products
Asian Paints
Colgate-Palmolive (India)
Dabur India
GlaxoSmithkline Consumer (a)
2,588
ADD
248,231
5,453
96
71.5
82.6
100.4
85.3
15.5
21.5
36.2
31.3
25.8
22.3
19.6
15.9
15.5
12.3
9.9
1.0
1.4
1.7
51.8
44.9
43.5
3,000
15.9
5.7
822
SELL
111,786
2,456
136
31.1
31.0
36.0
44.2
(0.5)
16.2
26.4
26.5
22.8
21.6
19.8
17.2
34.3
29.6
25.6
2.4
2.8
3.3
156.1
119.7
120.3
800
(2.7)
2.8
93
ADD
160,309
3,522
1,731
2.9
3.2
3.8
28.1
11.7
17.9
32.0
28.6
24.3
24.1
19.8
16.5
16.9
11.7
9.1
1.1
1.2
1.4
57.4
49.0
42.7
110
18.8
5.0
2,088
ADD
87,822
1,929
42
55.4
71.9
84.1
23.6
29.8
17.1
37.7
29.1
24.8
21.2
18.3
15.7
9.8
9.2
7.5
0.9
2.4
1.3
27.9
32.4
33.0
2,400
14.9
1.0
Godrej Consumer Products
366
ADD
118,580
2,605
324
11.3
13.6
17.1
69.5
20.0
26.1
32.3
26.9
21.4
25.6
19.1
14.9
12.3
6.6
6.1
1.1
0.9
0.9
44.6
31.9
29.6
440
20.1
1.9
Hindustan Unilever
273
SELL
595,928
13,092
2,182
9.4
17.5
2.8
2.9
3.4
250
(8.5)
ITC
157
ADD
1,201,900
26,404
7,651
5.3
6.5
7.8
22.6
22.8
19.0
29.6
24.1
20.3
17.9
15.3
12.7
8.1
6.8
5.9
3.2
1.7
2.4
29.2
32.1
32.4
185
17.8
28.6
Jubilant Foodworks
499
SELL
31,871
700
64
5.6
11.5
14.5
347.1
104.4
26.3
88.9
43.5
34.4
47.6
25.8
17.5
27.1
16.7
11.3
47.3
47.6
39.1
450
(9.8)
13.4
Jyothy Laboratories
231
ADD
17,687
389
77
11.0
11.4
13.7
99.6
3.8
19.4
20.9
20.2
16.9
16.7
13.1
10.5
4.3
2.5
2.3
1.9
1.6
2.1
14.8
12.8
14.6
270
16.9
0.5
Marico
126
ADD
77,301
1,698
612
4.4
5.0
5.6
32.9
12.2
12.8
28.4
25.3
22.4
19.4
17.8
14.9
11.6
8.5
6.5
0.5
0.7
0.8
48.9
39.2
33.3
140
10.8
Nestle India (a)
11.4
(0.9)
2.2
17.9
29.0
28.4
24.0
19.8
20.5
17.4
23.1
20.1
71.1
75.9
77.8
15.7
2.3
REDUCE
327,057
7,185
96
74.4
88.4
108.0
27.0
18.8
22.1
45.6
38.4
31.4
30.2
25.8
21.3
56.3
43.9
33.9
1.4
1.8
2.2
136.0
128.5
121.8
3,100
(8.6)
2.4
96
ADD
59,212
1,301
618
6.1
5.2
5.9
14.5
(14.0)
14.2
15.8
18.4
16.1
7.5
8.1
7.3
1.2
1.2
1.1
2.1
1.8
2.1
10.2
8.4
9.1
110
14.9
2.9
Titan Industries
3,213
ADD
142,612
3,133
44
57.3
107.1
125.9
29.3
87.1
17.5
56.1
30.0
25.5
35.7
21.8
18.0
19.3
12.4
8.6
0.5
0.4
0.4
38.7
50.3
39.8
4,100
27.6
33.7
United Spirits
1,137
126
27.3
33.1
47.0
1,550
36.3
8.5
Tata Global Beverages
3,392
9.6
Consumer products
ADD
Cautious
142,857
3,138
3,323,151
73,004
49.9
21.5
41.9
41.7
34.3
24.2
16.1
15.0
12.3
3.8
3.4
3.0
0.2
0.2
0.3
9.8
10.5
13.3
24.8
17.4
19.7
32.2
27.4
22.9
20.0
17.7
14.7
10.0
8.3
7.2
2.1
1.8
2.1
31.0
30.2
31.3
Constructions
IVRCL
BUY
19,465
428
267
7.9
7.7
10.3
9.2
9.4
7.1
6.4
7.3
6.0
1.1
1.0
0.8
1.1
0.5
0.5
11.5
10.6
12.7
190
160.6
102
BUY
26,133
574
257
7.1
7.2
9.7
6.1
1.2
34.3
14.3
14.1
10.5
8.2
9.2
7.6
1.2
1.1
1.0
1.3
2.0
2.0
9.3
8.0
10.1
160
57.1
3.8
Punj Lloyd
73
REDUCE
24,620
541
340
(3.4)
1.3
8.5
(52.6)
(137.2)
567.0
(21.2)
56.9
8.5
17.3
8.4
5.9
0.8
0.8
0.7
0.2
0.1
1.0
(4.2)
1.4
9.0
90
24.1
11.1
Sadbhav Engineering
98
BUY
14,768
324
150
5.1
6.2
8.7
0.5
20.2
41.0
19.2
15.9
11.3
13.5
9.0
7.5
3.6
2.8
2.7
0.3
6.1
6.1
15.8
17.8
23.9
175
77.8
0.4
56.2
54.2
15.9
Nagarjuna Construction Co.
73
Construction
(6.6)
(2.3)
33.7
7.6
Attractive
84,986
1,867
79.0
24.8
16.1
9.0
10.2
8.4
6.5
1.1
1.1
1.0
0.8
1.8
2.1
4.5
6.6
10.8
Aban Offshore
586
BUY
25,488
560
44
106.6
104.6
107.6
10.0
(1.9)
2.9
5.5
5.6
5.4
7.8
6.5
6.4
1.1
1.2
1.0
0.6
0.6
0.7
24.3
26.1
20.4
815
39.1
Bharat Petroleum
604
BUY
218,334
4,796
362
57.6
52.9
49.5
224.5
(8.2)
(6.4)
10.5
11.4
12.2
6.1
6.3
6.5
1.6
1.4
1.3
2.3
2.7
2.7
14.6
12.4
10.7
740
22.5
11.2
Cairn india
322
RS
610,921
13,421
1,897
5.5
30.2
49.1
29.0
445.6
62.6
58.1
10.7
6.6
45.8
8.0
4.9
1.8
1.6
1.4
4.7
3.1
15.6
22.4
15.7
Castrol India (a)
410
SELL
101,348
2,226
247
15.4
21.0
21.7
44.6
36.2
3.5
26.6
19.5
18.9
15.7
12.1
11.5
22.0
20.9
19.8
3.0
4.1
4.3
83.8
109.9
107.9
390
(4.8)
0.8
GAIL (India)
458
ADD
580,393
12,750
1,268
24.8
29.4
37.4
11.7
18.8
27.3
18.5
15.6
12.2
10.4
9.3
8.2
3.2
2.8
2.4
1.6
2.0
2.5
17.4
18.1
19.8
540
18.0
14.3
98
REDUCE
55,007
1,208
562
7.3
8.5
8.6
232.7
16.8
0.9
13.4
11.5
11.4
6.9
7.0
6.5
3.2
2.6
2.2
1.0
2.2
3.5
27.1
24.9
21.1
90
(8.0)
4.0
Energy
GSPL
Hindustan Petroleum
353
BUY
119,620
2,628
339
51.6
46.3
39.5
204.2
(10.3)
(14.7)
6.8
7.6
8.9
2.4
2.6
2.6
0.9
0.8
0.8
3.4
4.1
3.5
13.1
10.6
8.3
490
38.9
10.1
Indian Oil Corporation
333
BUY
808,143
17,754
2,428
49.1
34.8
35.2
399.0
(29.2)
1.0
6.8
9.6
9.5
5.2
5.8
5.5
1.5
1.4
1.3
3.9
3.2
3.2
22.4
14.1
13.1
440
32.2
9.1
1,287
ADD
309,417
6,797
240
115.2
135.5
145.1
13.9
17.7
7.1
11.2
9.5
8.9
4.9
3.6
3.2
2.1
1.8
1.6
2.6
3.3
3.5
16.8
18.3
17.3
1,490
15.8
2.6
283
BUY
2,417,370
53,106
8,556
23.0
28.2
32.5
0.9
22.6
15.4
12.3
10.0
8.7
4.4
3.8
3.4
1.9
1.7
1.5
2.9
5.0
3.9
14.8
16.2
17.3
355
25.6
32.7
(22.0)
13.3
12.7
Oil India
Oil & Natural Gas Corporation
Petronet LNG
121
SELL
1,998
750
5.4
8.0
9.1
Reliance Industries
942
REDUCE
2,802,499
61,566
2,976
49.6
61.7
68.6
Neutral
8,139,477
178,811
Energy
90,938
19.7
105
(13.4)
6.1
24.2
11.2
19.0
15.3
13.7
9.7
7.4
6.3
1.9
1.7
1.5
0.7
0.9
1.1
11.4
12.9
12.9
990
5.1
125.6
34.7
18.1
15.0
13.5
11.5
10.0
6.8
5.7
4.9
1.9
1.7
1.5
1.9
2.6
2.7
13.8
14.8
15.2
190.2
(1.8)
48.9
13.8
22.5
15.1
9.1
8.4
3.6
3.0
2.6
1.4
2.1
2.5
15.9
20.4
Industrials
31.4
(35.2)
(35.4)
21.1
22.5
31.9
11.9
5.8
5.4
4.4
0.3
0.5
0.5
15.6
9.2
23.2
725
9.4
1.6
515
REDUCE
37,105
815
72
28.0
40.9
46.4
74.6
46.3
13.4
18.4
12.6
11.1
10.4
7.8
6.7
5.3
4.0
3.1
1.4
1.6
1.8
31.8
36.0
31.6
600
16.4
8.1
Bharat Electronics
ABB
1,685
REDUCE
134,832
2,962
80
96.1
105.6
120.1
(7.4)
9.9
13.7
17.5
16.0
14.0
8.1
7.1
5.9
3.0
2.6
2.3
1.1
1.5
1.5
17.5
17.6
17.6
1,800
6.8
1.6
Bharat Heavy Electricals
2,071
REDUCE
1,013,600
140.1
BGR Energy Systems
Crompton Greaves
Larsen & Toubro
663
REDUCE
140,400
3,084
212
16.7
10.8
37.7
22,267
490
87.9
115.5
267
BUY
171,024
3,757
642
12.8
14.4
16.2
46.5
12.0
12.5
20.8
18.5
16.5
12.0
10.6
8.9
6.8
5.2
4.1
0.5
0.7
0.8
37.9
31.9
27.8
310
16.3
7.1
ADD
983,299
21,601
605
57.9
74.9
86.0
15.6
29.2
14.9
28.0
21.7
18.9
16.0
11.8
10.2
4.4
3.6
3.1
0.8
0.7
0.9
18.6
18.4
17.7
1,850
13.9
66.1
23.6
17.9
14.8
12.9
10.1
8.2
6.4
5.0
4.0
0.9
1.2
1.4
29.8
31.3
30.2
2,400
15.9
32.8
Maharashtra Seamless
350
ADD
24,675
542
71
38.6
44.2
39.3
(10.9)
9.1
7.9
8.9
4.7
3.7
3.9
1.1
1.0
0.9
1.7
2.3
2.2
14.8
12.8
10.5
418
19.5
Siemens
838
REDUCE
282,591
6,208
337
22.4
27.4
33.2
39.5
21.9
21.3
37.4
30.6
25.3
20.0
18.3
14.8
8.7
7.2
5.9
0.6
0.7
0.8
25.2
25.6
25.5
735
(12.3)
9.5
48
REDUCE
76,419
1,679
1,594
(6.2)
(3.7)
3.5
(185.4)
(40.3)
(196.0)
(7.8)
(13.0)
13.6
13.6
17.0
7.5
1.1
1.1
1.1
0.4
(11.4)
(8.6)
7.9
45
(6.2)
25.9
Thermax
633
BUY
75,410
1,657
119
21.9
32.7
38.4
(9.6)
49.1
17.6
28.9
19.4
16.5
14.5
10.2
8.5
7.0
5.6
4.6
0.8
1.5
1.7
25.2
32.2
30.7
805
27.2
1.5
Voltas
177
331
10.9
10.6
12.1
57.4
200
13.1
4.5
Suzlon Energy
REDUCE
58,474
1,285
Cautious
2,997,829
65,857
Infrastructure
REDUCE
143,095
3,144
130
66.9
78.1
GMR Infrastructure
42
ADD
154,948
3,404
3,667
0.4
0.2
0.1
Gujarat Pipavav Port
Container Corporation
56
BUY
23,613
519
424
(3.7)
(1.3)
1.1
GVK Power & Infrastructure
1,101
60.5
29
BUY
45,481
999
1,579
1.0
1.3
1.5
IRB Infrastructure
175
BUY
58,047
1,275
332
11.6
13.5
12.3
Mundra Port and SEZ
142
2,017
3.3
4.2
6.7
Infrastructure
BUY
285,772
6,278
Cautious
710,956
15,619
28
India Daily Summary - February 1
Industrials
0.9
14.3
21.3
61.3
1,625
7.7
31.4
39.6
(2.1)
31.1
13.9
16.3
16.6
14.6
9.5
8.8
7.4
5.3
4.4
3.7
1.1
1.8
2.1
37.8
29.0
27.5
28.9
28.3
21.6
16.8
14.1
11.5
9.2
4.8
4.0
3.4
0.8
1.0
1.1
16.8
18.4
20.0
19.4
16.6
0.4
(0.6)
10.6
18.2
16.4
14.1
12.4
10.7
8.9
3.3
2.9
2.5
1.3
1.4
1.6
18.7
19.0
1,300
18.1
1.3
(43.7)
(49.4)
(55.8)
97.8
193.2
437.5
22.0
12.3
11.6
1.8
1.4
1.4
2.4
1.2
0.5
60
42.0
4.4
28.6
(64.8)
(186.1)
(15.0)
(42.8)
49.7
66.0
26.0
15.3
7.6
3.1
2.9
(75.1)
(9.7)
8.5
68
22.0
0.7
29.4
27.3
18.1
29.2
22.9
19.4
19.0
14.1
13.8
1.4
1.4
1.3
1.0
1.0
5.7
6.1
6.9
42
45.8
5.1
119.2
16.3
(8.8)
15.1
12.9
14.2
10.2
8.3
7.5
2.7
2.1
1.6
1.1
19.4
18.1
12.9
270
54.6
7.1
160
13.0
3.8
55.7
24.5
61.4
42.4
34.1
21.1
32.0
22.5
15.6
8.1
6.8
5.3
0.6
20.8
21.6
28.3
20.1
16.5
30.0
34.8
29.9
23.0
20.2
13.9
11.7
3.3
2.6
2.4
0.6
0.3
0.4
9.3
8.8
10.4
Company

29
Company
15-Feb-11
Price (Rs)
Rating
Mkt cap.
(Rs mn)
(US$ mn)
O/S
shares
(mn)
2010
EPS (Rs)
2011E
2012E
EPS growth (%)

2010
2011E
2012E
2010
PER (X)
2011E
2012E
EV/EBITDA (X)
2010
2011E 2012E
Price/BV (X)
2010 2011E 2012E
Dividend yield (%)

2010 2011E 2012E
2010
RoE (%)
2011E
2012E
Target
price
(Rs)
Upside
(%)
ADVT-3mo
(US$ mn)
Media
DB Corp
239
BUY
43,388
953
182
10.6
12.6
14.0
286.5
18.8
10.8
22.5
18.9
17.1
12.5
10.6
9.7
6.7
5.5
4.7
0.8
1.7
2.5
40.3
31.8
29.7
325
36.1
0.3
64
ADD
67,656
1,486
1,062
(2.5)
(1.6)
0.2
(63.1)
(33.2)
(109.5)
(25.8)
(38.6)
408.3
74.4
30.8
14.8
16.9
30.1
28.0
234.3
(56.0)
7.1
66
3.6
5.2
155
ADD
11,356
249
73
2.5
7.9
10.0
NM
220.4
27.5
63.1
19.7
15.5
17.6
12.8
10.4
3.2
2.6
2.2
4.8
4.8
6.5
17.9
23.7
16.4
200
29.2
0.0
HT Media
145
ADD
34,134
750
235
6.1
7.0
8.5
623.3
15.4
21.0
23.8
20.6
17.0
12.3
9.3
7.5
3.4
2.5
2.3
0.2
1.4
2.8
15.3
13.8
13.9
170
17.0
0.3
Jagran Prakashan
117
BUY
35,295
775
301
5.8
7.0
7.9
92.0
19.2
13.4
20.1
16.8
14.8
12.0
9.8
8.8
5.8
5.2
4.7
3.0
3.4
4.3
30.0
32.4
33.4
155
32.3
0.5
DishTV
Hindustan Media Ventures
Sun TV Network
405
Zee Entertainment Enterprises
117
Media
3,510
394
13.1
18.3
22.7
ADD
114,420
2,514
978
5.3
4.8
6.2
Cautious
REDUCE
466,027
159,780
10,238
44.0
26.3
195.8
35.5
450
11.0
5.5
28.4
21.9
24.3
18.9
17.9
15.2
11.7
2.9
2.8
2.7
0.9
1.1
1.2
12.7
11.8
14.7
130
11.2
7.6
36.1
39.7
35.9
37.8
27.8
20.4
18.2
13.6
10.6
5.4
4.7
4.3
1.2
1.4
1.9
14.2
16.8
21.0
(9.7)
24.1
31.0
22.2
17.9
17.6
12.8
10.4
8.3
6.9
5.8
1.8
1.8
2.5
28.3
34.2
Metals & Mining

Coal India
Hindalco Industries
Hindustan Zinc
302
ADD
1,910,384
41,968
6,316
15.2
21.1
363.0
13.0
22.6
19.9
17.6
14.3
11.9
9.3
8.1
7.0
5.6
4.5
1.2
1.7
2.1
40.4
35.4
34.8
345
14.1
212
ADD
406,534
8,931
1,914
20.0
16.2
16.9
25.0
(18.8)
4.3
10.6
13.1
12.6
6.1
7.4
7.5
1.9
1.7
1.5
0.6
0.6
0.6
20.4
13.6
12.7
250
17.7
49.7
1,269
BUY
536,151
11,778
423
95.6
103.7
125.5
48.2
8.4
21.0
13.3
12.2
10.1
9.0
7.4
4.9
2.8
2.3
1.9
0.5
0.5
0.5
25.1
21.7
21.5
1,535
21.0
4.9
931
38.2
41.0
48.0
16.9
7.1
17.3
17.0
15.9
13.5
11.8
10.8
8.9
5.4
4.0
3.1
0.2
0.4
0.4
37.7
29.2
26.0
640
(1.7)
24.5
37.4
Jindal Steel and Power
651
REDUCE
606,001
13,313
JSW Steel
898
17.2
REDUCE
222,929
4,897
248
80.4
67.1
99.2
481.1
(16.5)
47.9
11.2
13.4
9.1
9.2
8.1
5.4
2.0
1.3
1.0
0.8
1.0
1.1
16.0
11.6
12.1
1,000
11.3
National Aluminium Co.
405
SELL
261,042
5,735
644
12.2
18.3
20.5
(37.2)
50.5
12.0
33.3
22.1
19.7
15.5
10.3
8.8
2.5
2.3
2.1
0.6
1.2
1.2
7.8
10.9
11.3
300
(26.0)
Sesa Goa
309
REDUCE
274,607
6,033
890
29.6
52.6
62.2
23.5
77.9
18.3
10.4
5.9
5.0
8.6
3.6
4.8
3.4
2.0
1.5
1.2
1.2
1.2
35.8
32.9
33.0
315
2.1
25.9
Sterlite Industries
164
BUY
549,631
12,074
3,362
12.0
13.0
19.4
2.8
8.0
49.4
13.6
12.6
8.4
8.7
7.2
4.4
1.5
1.3
1.2
0.6
0.6
0.6
12.9
11.2
14.8
200
22.3
26.2
Tata Steel
617
624,790
13,726
1,013
(3.3)
64.4
69.7
(103.6)
(2,051.8)
8.2
(186.8)
22.4
18.4
710
15.1
107.3
5,392,068
118,455
18.9
19.0
Metals & Mining
BUY
Attractive
9.4
36.3
21.3
18.1
9.6
8.8
11.9
6.5
5.9
2.7
1.8
1.5
1.1
1.2
13.3
10.9
10.0
7.8
6.5
3.2
2.5
2.1
0.8
1.1
1.1
(1.5)
17.7
0.6
Pharmaceutical
19.0
28.8
35.7
42.2
32.9
24.3
20.4
11.5
3.5
3.3
2.9
8.3
10.4
12.1
565
22.3
Biocon
336
ADD
67,230
1,477
200
14.8
18.3
22.7
216.4
23.4
24.2
22.7
18.4
14.8
13.1
9.9
8.2
3.8
3.2
2.7
17.9
19.3
20.5
445
32.4
5.5
Cipla
Apollo Hospitals
310
REDUCE
248,785
5,465
803
13.7
12.1
16.0
38.1
(11.9)
32.3
22.6
25.7
19.4
16.2
17.2
13.3
4.2
3.7
3.2
0.6
0.8
0.8
21.1
15.4
17.9
300
(3.2)
14.0
Cadila Healthcare
769
ADD
157,370
3,457
205
24.7
33.3
38.2
66.9
34.9
14.7
31.1
23.1
20.1
20.1
15.8
13.5
9.7
7.2
5.7
0.7
0.9
1.0
36.0
35.9
31.6
880
14.5
1.7
Dishman Pharma & chemicals
102
ADD
8,284
182
81
14.4
15.8
20.7
(19.7)
9.7
30.7
7.1
6.4
4.9
6.7
6.0
4.6
1.0
0.9
0.8
15.5
15.1
17.0
210
106.2
Divi's Laboratories
462
BUY
59,472
1,307
129
10.9
14.0
28.2
14.5
1.6
0.7
656
REDUCE
87,022
1,912
133
25.8
26.8
37.1
(19.2)
3.9
38.6
25.5
24.5
17.7
18.8
18.2
12.4
5.7
5.0
4.2
24.7
21.7
25.6
700
6.7
2.4
Dr Reddy's Laboratories
1,539
REDUCE
261,346
5,741
170
48.0
68.4
72.2
48.1
42.6
5.5
32.1
22.5
21.3
17.7
12.8
11.9
6.9
5.4
4.5
0.7
0.5
0.6
22.2
27.0
22.9
1,150
(25.3)
15.0
GlaxoSmithkline Pharmaceuticals (a)
18.4
15.9
10.5
29.7
2,000
(10.0)
2,222
REDUCE
188,236
4,135
85
59.1
70.2
79.6
8.1
18.7
13.5
37.6
27.9
21.8
Glenmark Pharmaceuticals
285
REDUCE
79,671
1,750
280
12.7
17.6
20.6
14.3
38.3
17.3
22.4
16.2
13.8
14.5
10.9
9.7
3.4
2.8
2.4
16.4
18.4
18.2
330
16.0
5.9
193
REDUCE
30,753
676
159
26.5
14.6
16.9
49.0
(45.1)
15.9
7.3
13.3
11.4
6.6
10.1
8.3
1.4
1.4
1.3
1.0
1.0
1.3
26.3
11.9
12.1
220
14.0
1.3
Lupin
423
ADD
188,086
4,132
445
15.3
17.6
22.4
27.3
15.0
26.9
27.6
24.0
18.9
23.1
19.8
15.4
7.3
5.9
4.7
0.7
0.8
1.1
34.1
27.3
28.0
465
9.9
15.1
Ranbaxy Laboratories
516
234.8
(39.4)
Sun Pharmaceuticals
424
SELL
ADD
Cautious
221,119
71.9
21.5
35.4
17.7
11.5
18.1
5.6
9.0
4.1
7.7
3.7
0.8
0.8
29.8
7.0
30.7
20.1
1.3
4,858
428
7.2
24.0
14.6
(128.9)
10.4
340
(34.1)
11.2
438,939
9,643
1,036
13.0
17.4
19.7
(25.7)
33.4
13.1
32.5
24.4
21.5
25.8
18.3
15.0
5.5
4.6
3.8
0.6
0.6
0.6
18.2
21.0
19.9
480
13.2
10.3
2,124,912
46,681
45.3
20.0
12.8
28.8
24.0
21.3
17.9
14.3
12.5
5.4
3.6
3.1
0.5
0.6
0.6
18.6
14.8
14.4
22.6
23.9
17.4
17.6
15.0
Property
DLF
240
ADD
410,940
9,028
1,714
10.6
10.0
13.8
12.4
1.4
1.3
1.2
0.9
1.2
2.1
6.6
5.5
7.3
265
10.6
46.5
Housing Development & Infrastructure
149
ADD
62,022
1,363
415
15.9
23.0
28.4
(24.4)
44.0
23.9
9.4
6.5
5.3
7.5
7.6
4.6
0.9
0.7
0.6
10.0
11.8
12.5
180
20.4
29.6
Indiabulls Real Estate
115
RS
46,277
1,017
402
(0.4)
3.1
8.5
(134.9)
(60.1)
(865.5)
(5.5)
178.9
37.3
(288.9)
37.7
13.5
(45.9)
52.3
15.5
0.4
0.4
0.4
(0.2)
1.0
2.9
21.4
Mahindra Life Space Developer
343
BUY
13,987
307
41
19.2
21.7
30.4
69.7
13.1
40.1
17.9
15.8
11.3
16.0
13.2
7.8
1.5
1.4
1.2
1.0
1.2
1.3
8.6
9.0
11.6
435
26.9
0.4
Oberoi Realty
228
BUY
75,084
1,649
330
13.7
18.7
24.9
57.1
36.9
32.7
16.6
12.2
9.2
14.6
7.9
5.1
4.0
2.2
1.8
0.1
0.4
0.7
27.7
23.3
21.5
305
33.9
1.0
Phoenix Mills
186
BUY
26,941
592
145
4.1
6.1
7.6
(16.7)
48.6
24.2
45.0
30.3
24.4
37.7
22.7
17.4
1.8
1.7
1.6
0.6
0.8
1.1
3.9
5.7
6.7
300
61.3
Puravankara Projects
105
REDUCE
22,506
494
213
6.8
7.3
8.8
0.6
7.6
19.9
15.5
14.4
12.0
18.0
16.3
11.7
1.6
1.5
1.3
1.9
1.9
1.9
10.5
10.5
11.6
100
(5.2)
0.1
Sobha Developers
242
BUY
23,682
520
98
14.1
18.8
24.0
(7.1)
33.4
27.9
17.2
12.9
10.1
14.3
10.7
8.2
1.4
1.2
1.1
0.4
0.5
0.7
9.7
10.1
11.7
380
57.3
1.7
35
RS
93,187
2,047
2,666
3.0
2.4
3.9
(58.8)
(21.3)
62.1
11.5
14.6
9.0
14.4
16.2
9.1
0.9
0.8
0.7
0.9
9.0
5.6
8.3
(100.0)
41.0
774,627
17,017
(44.6)
15.3
42.0
19.7
17.1
12.0
16.1
13.7
9.7
1.2
1.0
1.0
0.7
0.8
1.3
5.9
6.1
8.1
Unitech
Property
Cautious
0.3
Pharmaceuticals
31.7

15-Feb-11
Price (Rs)
Rating
Mkt cap.
(Rs mn)
(US$ mn)
O/S
shares
(mn)
2010
EPS (Rs)
2011E
2012E
EPS growth (%)

2010
2011E
2012E
2010
PER (X)
2011E
2012E
EV/EBITDA (X)
2010
2011E 2012E
Price/BV (X)
2010 2011E 2012E
Dividend yield (%)

2010 2011E 2012E
2010
RoE (%)
2011E
2012E
Target
price
(Rs)
Upside
(%)
ADVT-3mo
(US$ mn)
Sugar
Bajaj Hindustan
78
SELL
14,849
326
191
(7.9)
0.2
6.4
(343.6)
(102.5)
3,238.8
(9.9)
402.4
12.1
10.1
6.2
4.5
0.7
0.7
0.7
0.9
0.9
0.9
(7.1)
0.2
5.8
80
3.1
Balrampur Chini Mills
72
ADD
18,563
408
257
0.8
8.3
8.4
(89.9)
974.0
1.0
93.3
8.7
8.6
12.3
5.4
4.3
1.4
1.2
1.1
0.6
0.6
0.6
1.5
14.8
13.1
90
24.5
4.6
3.9
Shree Renuka Sugars
83
REDUCE
55,727
1,224
670
8.8
4.4
4.2
164.5
(49.8)
(4.2)
9.4
18.8
19.6
6.0
8.9
8.2
2.2
1.8
1.5
0.5
0.4
0.4
29.1
11.4
9.8
90
8.2
25.0
10.7
Cautious
89,140
1,958
(4.2)
11.6
21.3
19.3
17.3
14.3
8.0
7.0
5.7
1.5
1.3
1.2
0.6
0.5
0.5
7.7
7.7
8.2
HCL Technologies
483
REDUCE
338,100
7,428
700
17.5
22.8
29.6
0.2
30.3
29.4
27.6
21.2
16.3
13.6
12.8
10.1
4.8
4.3
3.7
0.8
1.6
1.7
19.3
21.7
24.5
440
(8.9)
Hexaware Technologies
107
BUY
15,428
339
144
9.3
5.1
10.4
127.7
(45.6)
104.3
11.5
21.1
10.3
6.2
13.9
7.0
1.8
1.7
1.5
0.9
0.9
0.9
17.8
8.2
15.0
125
16.4
BUY
1,783,160
39,173
574
108.3
120.0
155.2
5.7
10.8
29.3
28.7
25.9
20.0
21.1
18.0
13.8
7.7
6.9
5.6
0.8
1.9
1.5
30.1
28.1
30.9
3,700
19.1
74.5
76,028
1,670
1,176
2.5
3.1
4.3
(190.7)
24.7
37.4
26.0
20.9
15.2
12.0
11.9
7.1
4.0
3.6
3.4
58.5
18.5
23.2
70
8.3
15.4
0.7
Sugar
Technology
Infosys Technologies
Mahindra Satyam
Mindtree
3,107
65
REDUCE
6.1
449
REDUCE
18,471
406
41
52.2
27.1
41.5
294.3
(48.1)
53.1
8.6
16.6
10.8
7.4
8.8
5.6
2.8
2.4
2.0
0.5
0.6
0.9
35.2
15.4
19.9
500
11.4
Mphasis BFL
664
SELL
139,983
3,075
211
43.6
51.8
48.9
207.6
18.8
(5.5)
15.2
12.8
13.6
12.3
11.0
9.5
6.0
4.2
3.3
0.5
0.6
0.7
48.1
38.6
27.4
610
(8.2)
Polaris Software Lab
189
SELL
18,833
414
100
15.4
19.5
19.5
16.9
26.8
0.3
12.3
9.7
9.7
6.2
7.8
6.5
2.2
1.8
1.6
1.9
2.0
2.1
18.6
20.5
17.7
175
(7.4)
4.6
1,098
BUY
2,148,418
47,197
1,957
35.1
44.4
54.0
32.8
26.4
21.6
31.3
24.7
20.3
23.9
18.3
14.2
10.3
8.4
6.9
1.8
1.6
2.0
37.6
37.4
37.2
1,350
23.0
43.6
TCS
Tech Mahindra
636
Wipro
425
Technology
1,730
124
65.1
65.1
65.9
ADD
1,040,934
22,868
2,447
18.9
21.7
25.6
Attractive
REDUCE
5,734,798
78,763
125,984
(9.6)
(0.1)
1.3
9.8
9.8
9.6
8.0
8.7
8.1
2.7
2.2
1.9
0.5
0.3
0.3
34.5
26.3
5.9
22.1
720
13.3
3.2
22.1
15.2
17.7
22.6
19.6
16.7
17.1
14.3
11.6
5.3
4.4
3.6
0.8
1.0
1.3
26.5
24.4
23.7
525
23.4
18.1
24.6
17.4
21.1
26.0
22.1
18.3
18.7
15.9
12.5
6.8
5.8
4.8
1.2
1.7
1.6
26.1
26.3
26.3
24.4
14.3
38.1
Telecom
329
REDUCE
1,249,980
27,460
3,798
5.8
(27.7)
24.6
13.9
19.3
15.5
7.9
9.3
7.4
3.0
2.6
2.2
15.3
305
(7.3)
IDEA
62
REDUCE
204,588
4,494
3,300
2.7
2.4
1.2
(5.8)
(11.2)
(48.9)
22.7
25.5
50.0
8.0
9.0
7.8
1.8
1.7
1.6
7.2
6.9
3.5
55
(11.3)
MTNL
Bharti Airtel
44
SELL
27,815
611
630
(15.6)
(10.4)
(9.1)
(750.8)
(33.7)
(11.9)
(2.8)
(4.3)
(4.8)
1.0
1.2
1.6
0.3
0.3
0.3
(8.5)
(6.1)
(5.7)
35
(20.7)
1.3
Reliance Communications
102
SELL
216,557
4,757
2,133
19.7
6.9
7.9
(30.9)
(65.2)
15.0
5.1
14.8
12.9
6.5
8.2
7.4
0.5
0.5
0.5
0.8
11.0
3.3
3.7
90
(11.4)
23.9
Tata Communications
211
285
14.0
15.2
15.7
225
6.8
0.9
Telecom
REDUCE
60,021
1,319
Cautious
1,758,961
38,641
5,847
23.6
17.1
21.3
3.2
8.2
3.5
15.0
13.9
13.4
6.2
5.7
5.4
0.8
0.8
0.8
3.1
3.6
4.0
5.2
5.5
5.5
(12.3)
(38.9)
17.9
12.6
20.6
17.5
7.7
9.1
7.4
1.5
1.4
1.3
0.2
0.1
0.1
12.1
6.9
7.6
NM
155.8
7.6
Utilities
Adani Power
122
CESC
ADD
266,178
2,180
0.8
2.8
16.5
252.0
500.1
44.3
7.4
130.6
31.5
6.7
4.6
4.2
2.7
44.1
140
295
BUY
36,825
809
125
34.6
36.6
42.7
8.5
5.8
16.8
8.5
8.1
6.9
5.3
4.9
5.7
0.9
0.8
0.7
1.5
1.6
1.8
10.8
10.2
10.8
459
55.7
1.3
Lanco Infratech
40
BUY
96,441
2,119
2,405
2.1
3.6
4.9
46.6
67.4
36.6
18.8
11.2
8.2
12.2
8.5
6.5
2.9
2.3
1.8
17.4
21.0
22.5
80
99.5
8.6
NHPC
24
REDUCE
299,523
6,580
12,301
1.9
1.5
1.7
74.9
(19.4)
15.6
13.1
16.3
14.1
9.1
9.8
7.8
1.2
1.1
1.1
2.3
1.6
1.9
9.7
7.1
7.8
28
15.0
4.4
NTPC
181
REDUCE
1,491,605
32,768
8,245
10.5
10.1
11.9
6.8
(3.2)
17.6
17.2
17.8
15.2
2.0
2.1
1.9
2.3
14.1
12.6
13.7
195
7.8
Reliance Infrastructure
635
BUY
169,803
3,730
267
62.0
60.8
70.8
(1.0)
(1.9)
16.3
10.2
10.4
9.0
10.4
7.3
6.0
0.8
0.7
0.7
1.0
1.5
1.6
6.5
9.1
10.7
1,030
62.2
31.7
Reliance Power
121
SELL
340,256
7,475
2,805
2.9
2.9
4.0
179.7
0.1
38.4
42.5
42.5
30.7
(336.7)
237.0
51.1
2.4
2.1
2.0
4.8
5.2
6.6
115
(5.2)
12.7
1,269
ADD
313,146
6,879
247
63.5
70.7
84.4
26.7
11.3
19.4
20.0
17.9
15.0
12.3
12.4
11.6
2.4
2.2
2.0
0.9
1.1
1.2
13.8
13.0
14.0
1,415
11.5
7.1
3,013,776
66,208
22.6
3.6
37.2
19.2
18.6
13.5
14.5
14.5
10.9
2.0
1.8
1.7
1.4
1.3
1.5
10.4
9.9
12.3
Tata Power
Utilities
Cautious
13.2
13.4
12.1
2.3
2.2
4.2
9.9
14.7
4.0
11.8
Others
Havells India
Jaiprakash Associates
332
ADD
41,463
911
125
6.1
23.2
28.9
141.3
278.2
24.5
54.1
14.3
11.5
15.5
9.8
7.8
9.7
6.0
4.1
0.6
0.8
0.8
14.3
52.1
42.4
425
27.9
1.7
85
BUY
187,444
4,118
2,214
1.7
5.1
5.6
(12.7)
188.8
11.6
48.4
16.8
15.0
21.6
12.5
11.0
2.2
1.9
1.7
5.1
12.2
12.1
135
59.5
30.5
(71.7)
Jet Airways
488
BUY
42,129
926
86
(69.8)
25.6
58.7
(136.7)
129.5
(7.0)
19.1
8.3
12.4
7.8
6.4
2.4
2.2
1.7
12.0
23.0
850
74.2
19.8
Sintex
166
REDUCE
45,043
990
272
12.1
14.4
16.5
(49.6)
19.3
14.5
13.7
11.5
10.0
11.9
9.1
7.7
2.1
1.8
1.5
0.7
0.8
0.8
15.5
15.7
15.3
180
8.7
7.0
44
BUY
17,893
393
403
2.5
5.2
6.1
(117.4)
104.4
16.8
17.5
8.6
7.3
20.5
4.2
5.5
(5.2)
4.2
2.7
(15.9)
516.3
44.8
85
91.4
4.2
Tata Chemicals
320
REDUCE
77,951
1,712
243
26.4
26.8
35.4
(27.1)
1.5
31.9
12.1
11.9
9.1
6.4
5.7
4.3
1.7
1.5
1.3
2.8
3.0
3.0
16.0
16.9
19.3
370
15.5
3.9
United Phosphorus
143
BUY
1,456
462
11.9
12.9
17.6
220
53.5
6.9
SpiceJet
18.1
8.3
37.3
12.1
11.1
8.1
6.6
5.7
4.3
2.2
1.7
1.5
1.3
1.4
1.4
19.1
17.5
19.4
478,198
10,505
(539.8)
140.7
29.0
33.1
13.7
10.7
13.0
9.2
7.9
2.4
2.0
1.7
0.8
0.8
0.8
7.2
14.2
15.7
46,988,639
1,032,264
21.1
20.2
20.6
19.0
15.8
13.1
11.2
9.5
8.0
2.9
2.5
2.2
1.3
1.5
1.6
15.3
15.7
16.5
KS universe (b) ex-Energy
38,849,162
853,453
17.3
20.9
22.3
20.7
17.1
14.0
13.5
11.5
9.4
3.3
2.7
2.4
1.1
1.3
1.4
15.8
16.0
17.0
KS universe (d) ex-Energy & ex-Commodities
32,530,496
714,642
19.0
20.2
22.2
21.7
18.0
14.8
15.2
13.0
10.5
3.3
2.8
2.5
1.2
1.3
1.4
15.3
15.7
16.7
Others
KS universe (b)
66,274
Notes:
(b) 2010 means calendar year 2009, similarly for 2011 and 2012 for these particular companies.
(c) EV/Sales & EV/EBITDA for KS universe excludes Banking Sector.
(d) Rupee-US Dollar exchange rate (Rs/US$)=
45.52
30
India Daily Summary - February 1
(a) For banks we have used adjusted book values.
Company
Disclosures
Kotak Institutional Equities Research coverage universe

Distribution of ratings/investment banking relationships
Percentage of companies covered by Kotak Institutional Equities,
within the specified category.
70%
60%
Percentage of companies within each category for which Kotak

Institutional Equities and or its affiliates has provided investment
banking services within the previous 12 months.
50%
40%
32.1%
33.3%
5.1%
5.1%
ADD
REDUCE
30%
23.1%
20%
11.5%
10%
3.2%
0.6%
0%
BUY
SELL
* The above categories are defined as follows: Buy = We expect

this stock to outperform the BSE Sensex by 10% over the next 12
months; Add = We expect this stock to outperform the BSE
Sensex by 0-10% over the next 12 months; Reduce = We expect
this stock to underperform the BSE Sensex by 0-10% over the
next 12 months; Sell = We expect this stock to underperform the
BSE Sensex by more then 10% over the next 12 months. These
ratings are used illustratively to comply with applicable
regulations. As of 30/09/2010 Kotak Institutional Equities
Investment Research had investment ratings on 156 equity
securities.
Source: Kotak Institutional Equities
As of September 30, 2010
Ratings and other definitions/identifiers

Definitions of ratings
BUY. We expect this stock to outperform the BSE Sensex by 10% over the next 12 months.
ADD. We expect this stock to outperform the BSE Sensex by 0-10% over the next 12 months.
REDUCE. We expect this stock to underperform the BSE Sensex by 0-10% over the next 12 months.
SELL. We expect this stock to underperform the BSE Sensex by more than 10% over the next 12 months.
Our target price are also on 12-month horizon basis.
Other definitions
Coverage view. The coverage view represents each analysts overall fundamental outlook on the Sector. The coverage view will consist of one of the following
designations: Attractive, Neutral, Cautious.
Other ratings/identifiers
NR = Not Rated. The investment rating and target price, if any, have been suspended temporarily. Such suspension is in compliance with applicable
regulation(s) and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic
transaction involving this company and in certain other circumstances.
CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.
NC = Not Covered. Kotak Securities does not cover this company.
RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and price target, if any, for this stock, because there is not a sufficient
fundamental basis for determining an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock
and should not be relied upon.
NA = Not Available or Not Applicable. The information is not available for display or is not applicable.
NM = Not Meaningful. The information is not meaningful and is therefore excluded.
31
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1.
Note that the research analysts contributing to this report may not be registered/qualified as research analysts with FINRA; and
2.
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Tata Steel Future Projections

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Tata Steel Future Projections

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INDIA DAILY

February 16, 2011

15-Feb 1-day1-mo 3-mo

Tata Steel: Solid operational performance

0.4 (3.1) (10.0)

Jubilant Lifesciences: Disappointing quarter

Value traded India

Reliance Power: Expensive despite recent correction

(1.0) (5.7) (3.3)

Deri. open interest

Net investment (US$mn)

Top movers -3mo basis

Tata Steel (TATA)

FEBRUARY 16, 2011

Price (Rs): 617

Indian operations shine with unexpected spike in steel realization

Metals & Mining

Debt increases by 11% to US$13.2 bn

Update on strategic projects

Few changes to our estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Metals & Mining

Source: Kotak Institutional Equities estimates

Following factors underpin our BUY rating on Tata Steel

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Metals & Mining

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Metals & Mining

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Metals & Mining

Tata Steel India

Realization (US$/ ton)

Tata Steel (Consolidated)

Realization (US$/ ton)

Source: Company, Kotak Institutional Equities estimates

Tata Steel standalone

Consolidated group net debt

Arrived market capitalization

Add: Value of investments

Source: Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Metals & Mining

China CFR 63% Fe

Source: Bloomberg, Kotak Institutional Equities estimates

Tata Steel (India)

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Metals & Mining

Profit model (Rs mn)

Balance sheet (Rs mn)

Free cash flow (Rs mn)

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Metals & Mining

Profit model (Rs mn)

Balance sheet (Rs mn)

Free cash flow (Rs mn)

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Reliance Power (RPWR)

FEBRUARY 16, 2010