Company report FIG

Real Estate abc

Equity – India
Global Research

Housing Development &

Infrastructure Ltd (HDIL)
Overweight (V)
Target price (INR) 416.0
Share price (INR) 334.2 Upgrade to OW(V): Leading the Mumbai property pack
Potential total return (%) 24.7
Mar 2009a 2010e 2011e
 TDR pricing in Mumbai should increase further despite the
HSBC EPS 24.35 10.19 25.43 120% jump in 1H FY10
HSBC PE 13.8 32.9 13.2
Performance 1M 3M 12M  HDIL should be the biggest beneficiary, leaving room for
Absolute (%) 14.4 39.9 106.1
Relative^ (%) 2.8 21.7 50.7 further share price outperformance
Note: (V) = volatile (please see disclosure appendix)

 Upgrade to Overweight (V) and raise target price to INR416

Demand recovery in Mumbai should strengthen TDR pricing. Prices in most Mumbai
land pockets are up 15-20% from the bottom (February 2009). However, Transfer of
Development Rights (TDR) prices have risen by 100-120%, to INR1,800-2,000psf. New
launches from 3Q-4Q FY10 (the typical new launch period) should sustain TDR demand.
We believe TDR pricing could improve a further 20-30% over FY10-11, as residential
demand drivers continue to sustain cyclical momentum.

HDIL will benefit the most from strong TDR prices. HDIL will be a big beneficiary given
its position as the largest player in the Mumbai TDR market with annual TDR generation of
7-8m sq ft. We estimate the company could average 5-6m sq ft of TDR sales annually (HDIL
sold c1.8m sq ft in 1Q FY10). Besides boosting profitability, this would allow HDIL to
7 October 2009
maintain leverage and still accelerate the Airport Slum Rehabilitation project.
Ashutosh Narkar *
Analyst Upgrade to OW(V) from N(V). The revival in TDR pricing and expectations of sustained
HSBC Securities and Capital Markets improvement in the Mumbai property market have led us to upgrade our target price for HDIL.
(India) Private Ltd
We raise our TP to INR416 (from INR100). The sharp increase comes as we shift to an
+9122 22681474
ashutoshnarkar@hsbc.co.in upcycle valuation and make changes to several assumptions, including: 1) an increase in
realisation for TDR (20-30%) and 15% higher property prices in FY11 (0% earlier), 2)
lowering WACC to 13.7% (14.8% earlier), 3) lowering our NAV discount from 60% (cyclical
View HSBC Global Research at:
http://www.research.hsbc.com bottom valuation) to 10% (business upcycle valuation), in line with its peers DLF and Unitech,
*Employed by a non-US affiliate of 4) adding a terminal value equivalent to 14% of our March 2010 NAV of INR361 (INR250
HSBC Securities (USA) Inc, and is not
registered/qualified pursuant to NYSE
earlier), 5) carry forward our valuation base to December 2010 (1-year forward).
and/or NASD regulations
HDIL: valuation snapshot
Issuer of report: HSBC Securities and
Capital Markets Year to Mar FY08 FY09 FY10e FY11e FY12e
(India) Private Limited
Net profit (INRm) 14,061 7,801 3,789 9,456 13,825
EPS (INR) 65.6 28.3 10.2 25.4 37.2
Disclaimer & EPS growth 115.8% -56.9% -64.0% 149.6% 46.2%
Disclosures ROE 64.3% 16.6% 6.9% 13.5% 17.1%
PE (x) 5.1 11.8 32.9 13.2 9.0
This report must be read Price to book (x) 2.0 2.1 1.9 1.7 1.4
with the disclosures and Source: Company data, HSBC estimates

the analyst certifications in Index^ BOMBAY SE IDX Enterprise value (INRm) 136823
the Disclosure appendix, Index level 17,135 Free float (%) 39
RIC HDIL.BO Market cap (USDm) 2,440
and with the Disclaimer, Bloomberg HDIL IN Market cap (INRm) 115,926
which forms part of it Source: HSBC Source: HSBC
 Housing Development & Infrastructure Ltd (HDIL)
Real Estate abc
7 October 2009

Financials & valuation

Financial statements
Valuation data
Year to 03/2009a 03/2010e 03/2011e 03/2012e
Year to 03/2009a 03/2010e 03/2011e 03/2012e
Profit & loss summary (INRm)
Premium/(discount) to NAV 2.1 1.9 1.7 1.4
Revenue 17,504 12,365 21,178 30,957 PE* 13.8 32.9 13.2 9.0
EBITDA 13,384 7,453 13,354 18,898 FCF yield (%) -10.7 -1.0 4.5 -0.5
Depreciation & amortisation -41 -56 -67 -76 Dividend yield (%) 0.0 0.6 0.7 0.9
Operating profit/EBIT 13,344 7,396 13,288 18,822 Note: * = Based on HSBC EPS (fully diluted); All NAV figures on this page relate to book value
Net interest -5,949 -3,329 -2,531 -2,813
PBT 7,656 4,674 11,399 17,062
HSBC PBT 7,656 4,674 11,399 17,062 Price relative
Taxation 150 -886 -1,943 -3,238
Net profit 7,801 3,789 9,456 13,825 1200 1200
HSBC net profit 6,707 3,789 9,456 13,825 1000 1000
Cash flow summary (INRm) 800 800
Cash flow from operations -12,340 -163 7,232 2,758 600 600
Capex -78 -150 -150 -125
FCF enterprise -6,319 2,130 7,670 2,208 400 400
Cash flow from investment -78 -150 -150 -125 200 200
Dividends 0 -744 -930 -1,116
Change in net debt 13,114 -17,291 -4,954 857 0 0
FCF equity -12,268 -1,199 5,139 -605 2007 2008 2009 2010
Balance sheet summary (INRm) Housing Development & Inf Rel to BOMBAY SE SENSITIVE INDEX

Tangible fixed assets 749 791 875 924 Source: HSBC

Current assets 90,081 97,795 108,105 126,742
Cash & others 2,186 3,044 2,998 12,141
Note: Price at close of 6 Oct 2009
Total assets 92,368 100,125 110,518 129,204
Gross debt 41,433 25,000 20,000 30,000
Net debt 39,247 21,956 17,002 17,859
Shareholders funds 44,218 65,839 74,467 86,986
Invested capital 82,589 87,926 92,301 106,413

Ratio, growth and per share analysis

Year to 03/2009a 03/2010e 03/2011e 03/2012e
Y-o-y % change
Revenue -26.9 -29.4 71.3 46.2
EBITDA -21.6 -44.3 79.2 41.5
EBIT -21.7 -44.6 79.6 41.7
PBT -52.1 -38.9 143.9 49.7
HSBC EPS -62.9 -58.2 149.6 46.2
Ratios (%)
Revenue/IC (x) 0.2 0.1 0.2 0.3
ROIC 18.6 7.0 12.2 15.3
ROE 16.6 6.9 13.5 17.1
ROA 16.6 6.7 11.0 13.4
EBITDA margin 76.5 60.3 63.1 61.0
Operating profit margin 76.2 59.8 62.7 60.8
EBITDA/net interest (x) 2.2 2.2 5.3 6.7
Net debt/equity 88.8 33.3 22.8 20.5
Net debt/EBITDA (x) 2.9 2.9 1.3 0.9
CF from operations/net debt 42.5 15.4
Per share data (INR)
EPS reported (fully diluted) 28.32 10.19 25.43 37.18
HSBC EPS (fully diluted) 24.35 10.19 25.43 37.18
DPS 0.00 2.00 2.50 3.00
NAV 160.51 177.06 200.26 233.93

2
 Housing Development & Infrastructure Ltd (HDIL)
Real Estate abc
7 October 2009

Leading the Mumbai

property pack
 Demand revival in Mumbai markets looks sustainable
 Steady residential demand will improve TDR volumes, keeping
prices firm despite the huge run-up of 100-120%
 Average TDR realisation for HDIL should rise another 20-30%
over FY10-11

Demand revival in Mumbai New launches and sales (units) over Jan-Jun 2009 highlight
sharp improvement in major Indian cities
markets looks sustainable
20,000
Indian property markets, including Mumbai, have New launches Sales
15,000
reported a sharp revival in volumes over January-
Units

June 2009, although volumes slowed down in 2Q 10,000

FY10. We attribute this to a lack of new launches,
5,000
the rainy season and the annual “Shradh” period
(15 days each year, typically in September, when -
Pune

Bangalore

Hyderabad

Thane
Mumbai

Chennai
NCR

most Indians do not make a major asset purchase).

However, demand drivers have remained strong
indicating that improving fundamentals, along
with the festive season, could sustain residential
property demand.
We believe demand in Mumbai’s residential
property market is driven mainly by employment
stability and income growth in sectors like
financial services and corporate head office
operations, as well as ancillary segments like
Knowledge Process Outsourcing (KPO),
entertainment and organised retailing.
Source: PropEquity Research
Many of these sectors have continued to sustain
business improvement. We have analysed the
financial services industry using Indian equity
markets’ traded monthly value, the insurance
industry through Annual Premium Equivalent
(APE) growth and the banking sector through loan
growth (y-o-y growth of 13.8% and expectations
of 18% in FY10e and 25% in FY11e). We have
analysed corporate head office operations’
stability through Index of Industrial Production
(IIP) data, reflecting improving business
conditions for the manufacturing sector.

3
 Housing Development & Infrastructure Ltd (HDIL)
Real Estate abc
7 October 2009

After a consistent drop in the IIP growth rate, the last 3 Annual premium equivalent (APE) growth for Indian
months have seen a healthy improvement insurance sector has started showing signs of improvement

IIP Index (LHS) IIP Grow th (RHS) Annualized premium equiv alent y -o-y grow th
325 20% 50%
40%
300 15%
30%
275 10% 20%
250 5% 10%
0%
225 0% -10%
200 -5% -20%

Q1 FY08

Q2 FY08

Q3 FY08

Q4 FY08

Q1 FY09
Q2 FY09

Q3 FY09

Q4 FY09

Q1 FY10

Q2 FY10*
Oct- Feb- Jun- Oct- Feb- Jun- Oct- Feb- Jun-
06 07 07 07 08 08 08 09 09

Source: Bloomberg Source: IRDA; * 2Q FY10 data currently available only for July 2009

Indian equity markets have also revived over the same To further highlight the high beta movement of
period, reaching peak trading volumes
TDR prices, the property price upswing since
India equity market monthly turnov er-NSE
5,000 March 2009 has seen residential prices grow by a
mere 15-20% from their cyclical lows. However,
4,000
TDR prices have jumped 100-120% from their
3,000 lows. This suggests to us that further volume
INR b

2,000 growth in the market could sustain TDR price

1,000 growth momentum. HDIL sold 1.8m sq ft of TDR
volumes in 1Q FY10 at an average price of
-
INR1500psf. While 2Q FY10 is likely to be low
May -06 Jan-07 Sep-07 May -08 Jan-09 Sep-09
on volumes, TDR pricing in the market has
Source: National Stock Exchange already reached INR1,800-2,100psf.

Mumbai TDR and property price trends

Steady demand will keep TDR
pricing firm 9,000
Property prices (LHS) TDR prices (RHS)
4,000
We expect average TDR realisation 8,000 3,200
to rise by 20-30% in FY10-11
INR psf

INR psf

7,000 2,400
TDR pricing in the past has been volatile relative 6,000 1,600
to residential prices, and has a higher correlation 5,000 800
to residential volumes than prices. Our analysis 4,000 -
suggests that while Mumbai property prices Sep- Jan- May - Sep- Jan- May - Sep-
started correcting from June 2008, volumes had 07 08 08 08 09 09 09
already started to fall substantially from
Source: Company data, press reports, HSBC estimates
September 2007. However, TDR prices fell in
tandem with falling volumes starting in January Consequently, based on our expectation of an
2008 all the way up to February 2009. The 70% improvement in residential construction starts
fall in TDR prices was also much higher than the from 2H FY10, we could witness TDR prices
residential price fall of 15-25% across most going up further. We have factored in a TDR
regions in Mumbai (see chart below). price increase of 20-30% from the current

4
 Housing Development & Infrastructure Ltd (HDIL)
Real Estate abc
7 October 2009

INR1,800-2,100psf in our estimates for HDIL,  HDIL is one of the few players with large
while expecting Mumbai residential prices to land parcels on the Mumbai city outskirts –
grow by 15-20% in FY10-FY11. ideal for large-scale rental housing

Our TDR volumes for HDIL suggest
an 18% share of construction starts
Industry channel checks indicate that Mumbai
markets have demanded 30,000-32,000 housing
units annually over the past 2-3 years. At an
average unit size of 800 sq ft, this translates into
housing starts of c26m sq ft annually. Assuming
residential starts make up 70% of total
construction starts (commercial and residential),
we estimate total residential construction starts in
Mumbai at 37m sq ft. Our FY10 volume
expectation for HDIL, at 5.5m sq ft, would equate
to an 18% share of Mumbai construction start
volumes, which we think is comfortable given
that HDIL is the largest TDR generator in the
market. We believe our analysis is supported by
January-June 2009 sales volume of 17,869 units
 MMRDA will have to spend less on common
infrastructure to reach the rental housing
projects, improving HDIL’s chances
 HDIL’s historical low land cost enhances its
ability to sustain negative cash flows in the
initial project development period
 HDIL benefits from early monetization of the
land parcels along with higher FSI on these
distant suburban land parcels (MMRDA has
offered an FSI of 4 for the rental housing
scheme, comprising FSI of 3 for free sale and
FSI of 1 for rental housing development)
HDIL: rental housing plans
Virar Panvel
Total land area (acres) 525 255
Total land area (sq ft) 22.9 11.1

in Mumbai (excluding Thane). (HDIL sold 2.9m Area excluding infrastructure

sq ft in 1H FY10, implying an 18% market share Area (acres) 300 153
Area (m sq ft) 13.1 6.7
in construction starts). FSI 4.0 4.0
Total area (m sq ft) 52.27 26.62
Rental housing – great way to Area to MMRDA for rental housing 25% 25%
monetize suburban MMR land Area to MMRDA (m sq ft) 13.1 6.7

Free sale area for HDIL 75% 75%

The company has received a Letter of Intent Area (m sq ft) 39.2 20.0
(LOI) from MMRDA and is in the process of Area without rental housing (m sq ft) 22.9 7.8

getting regulatory approvals for development Project NPV (INRm) 2,723 1,272
plans for its 525-acre Virar land parcel. We Project NPV (INR/ share) 7.9 3.7
Source: Company data, HSBC estimates
believe HDIL could replicate MMRDA’s rental
housing scheme at its other large land parcels in
the MMR region, such as Panvel (250 acres). Our
positive stance stems from the following reasons:

 HDIL has large-scale development experience

of low-cost housing from its rehabilitation
projects (MMRDA plans c169 sq ft
apartments for rental housing)

5
 Housing Development & Infrastructure Ltd (HDIL)
Real Estate abc
7 October 2009

HDIL: potential rental housing project cash flow analysis

Year to Mar Total 2011e 2012e 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e 2021e
Virar rental housing project
MMRDA development M sq ft 13.1 0.9 1.9 1.9 1.9 1.9 1.9 2.8
Development cost INR psf 891 750 788 827 868 912 957 1,005
Development cost INR m 11,638 700 1,470 1,544 1,621 1,702 1,787 2,814

5% 5% 5% 5% 10% 10% 15% 15% 15% 15%

Free sale area m sq ft 39.2 2.0 2.0 2.0 2.0 3.9 3.9 5.9 5.9 5.9 5.9
FSI price INR psf 672 450 482 515 551 590 631 675 723 773 827
Sales cash flow INR m 26,336 882 944 1,010 1,081 2,312 2,474 3,971 4,249 4,547 4,865

Total post tax cash flow INR m 9,422 120 (526) (534) (540) 507 571 807 2,805 3,001 3,211

Panvel rental housing project

MMRDA development m sq ft 6.7 0.5 1.0 1.0 1.0 1.0 1.0 1.4
Development cost INR psf 891 750 788 827 868 912 957 1,005
Development cost INR m 5,927 357 749 786 825 867 910 1,433

5% 5% 5% 5% 10% 10% 15% 15% 15% 15%

Free sale area m sq ft 20.0 1.0 1.0 1.0 1.0 2.0 2.0 3.0 3.0 3.0 3.0
FSI price INR psf 672 450 482 515 551 590 631 675 723 773 827
Sales cash flow INR m 13,411 449 481 514 550 1,178 1,260 2,022 2,164 2,315 2,478

Total post tax cash flow INR m 4,941 0 61 (268) (272) (275) 258 291 554 1,428 1,528 1,635
Source: Company data, MMRDA, HSBC estimates

Earnings outlook HDIL: estimate changes and comparison with consensus

Year to Mar FY10e FY11e FY12e
Estimates relative to consensus –
Sales mix – revised
lower in FY10, higher in FY11 TDR revenues 84.5% 61.8% 35.7%
Other revenues 15.5% 38.2% 64.3%
We have altered our sales mix expectations for Total revenues 12,365 21,178 30,957
HDIL. We expect demand revival to percolate Y-o-y growth -29.4% 71.3% 46.2%

faster in TDR volume in the initial stage and to Sales mix – earlier
TDR revenues 28.8% 31.1% NA
later flow into FSI sales, reflected in our new Other revenues 71.2% 68.9% NA
sales mix estimate. This, along with the delay of Total revenues 15,095 27,347 NA
Y-o-y growth -13.8% 81.2%
certain projects in the development line-up, has
resulted in the EBITDA margin compressing EBITDA margin – revised 60.3% 63.1% 61.0%
EBITDA margin – earlier 77.9% 67.7% NA
sharply in FY10 by 18% in absolute terms. In line
PAT – revised 3,789 9,456 13,825
with this, our earnings estimates have been cut by PAT – earlier 5,739 11,289 NA
34% in FY10 and 16% in FY11. Change -34.0% -16.2%

HSBC earnings 3,789 9,456 13,825

Our TDR sales volumes of c5.5m sq ft are lower Consensus earnings 5,518 7,652 14,082
than the company’s guided volumes of 6-7m sq ft Difference -31.3% 23.6% -1.8%
Source: Company data, HSBC estimates
in FY10, which could be one of the reasons for
our lower-than-consensus estimates for FY10. We
expect volumes to pick up in FY11 on the back of
improving macro conditions from 2H FY10
leading to developers planning new project
launches in FY11, explaining our higher-than-
consensus estimates during the same period.

6
 Housing Development & Infrastructure Ltd (HDIL)
Real Estate abc
7 October 2009

Raise target price to INR416 HDIL: NAV calculation table

INRbn Per share (%)
Move prompted by improved demand
Residential 51 147 62.0%
and TDR pricing environment Commercial 17 49 20.8%
Retail 14 41 17.2%
The revival in TDR pricing and expectations of Gross asset value 82 238 100.0%
sustained improvement in the Mumbai property Less: Net debt 16 47
Add: Airport Project (NAV) 26 76
market have led us to upgrade our target price for Total net asset value 125 361
Less: NAV discount (12) (36)
HDIL. We have raised our target price to INR416 Add: Terminal value 18 53
(from INR100). Fair value (at Mar 2010) 131 378
Target price (at Dec 2010) 144 416
The sharp increase in our target price is for the Source: Company data, HSBC estimates

following reasons:
 An increase in realisation for TDR (20-30%)
and property prices by 15% in FY11 (0%
earlier). We maintain our property price
assumption beyond FY11 at 5%
 Lower WACC of 13.7% as against 14.8%
earlier. This is owing to a cut in debt cost
(14% to 12.5%) and lower cost of equity
(16.5% to 15.5%)
 Lowering NAV discount from 60% (cyclical
bottom valuation) to 10% (business upcycle
valuation) in line with its peers DLF and
Unitech. Our target valuation is based on the
historical evidence of Asian property
developers having traded at a c55% discount
to NAV in property market downcycles and a
c15% premium in upcycles
 Adding a terminal value equivalent to 14% of
our March 2010 NAV of INR361 (INR250
earlier). Our terminal value for HDIL is based
on the company delivering c5m sq ft of
annual revenues with an average free cash
flow of INR1,770psf in FY20 and a terminal
growth rate of 2%.
Our target price implies FY11e PB of 1.7x,
against sector coverage companies trading at an
average of 2.4x. A PE comparison is not
particularly useful as HDIL follows a project
completion method, while other peer coverage
companies follow the percentage of completion
method of accounting.
For Indian stocks, HSBC considers the average
cost of equity to be 10.5%. A volatile Indian stock
with a potential total return of 10 percentage
points on either side of 10.5%, i.e., 1-20.5%,
merits a Neutral rating. As HDIL’s potential total
return of 24.7% is higher than the Neutral band,
we upgrade to Overweight (V).
Key risks to our call
We expect the following key risks to our earnings
and valuation:
 Lower TDR volumes and pricing than
estimated could impact valuations
 Slum rehabilitation projects typically have a
longer gestation period and are prone to
delays. Any such event could impact HDIL’s
valuations negatively

 Carrying forward our valuation base to Dec
2010 (1 yr forward).
The above changes result in an increase in our NAV
estimate from INR250 (pre-fundraising) to INR361
(post-fundraising) and target price to INR416.
 Our positive stance on the company is based
on sustained demand for TDR volumes led by
an improvement in the macro environment.
The absence of such developments would be
negative for HDIL’s earnings and valuations.

7
 Housing Development & Infrastructure Ltd (HDIL)
Real Estate abc
7 October 2009

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8
 Housing Development & Infrastructure Ltd (HDIL)
Real Estate abc
7 October 2009

Disclosure appendix
Analyst certification
The following analyst(s), who is(are) primarily responsible for this report, certifies(y) that the opinion(s) on the subject
security(ies) or issuer(s) and any other views or forecasts expressed herein accurately reflect their personal view(s) and that no
part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained
in this research report: Ashutosh Narkar

Important disclosures
Stock ratings and basis for financial analysis
HSBC believes that investors utilise various disciplines and investment horizons when making investment decisions, which
depend largely on individual circumstances such as the investor's existing holdings, risk tolerance and other considerations.
Given these differences, HSBC has two principal aims in its equity research: 1) to identify long-term investment opportunities
based on particular themes or ideas that may affect the future earnings or cash flows of companies on a 12 month time horizon;
and 2) from time to time to identify short-term investment opportunities that are derived from fundamental, quantitative,
technical or event-driven techniques on a 0-3 month time horizon and which may differ from our long-term investment rating.
HSBC has assigned ratings for its long-term investment opportunities as described below.

This report addresses only the long-term investment opportunities of the companies referred to in the report. As and when
HSBC publishes a short-term trading idea the stocks to which these relate are identified on the website at
www.hsbcnet.com/research. Details of these short-term investment opportunities can be found under the Reports section of this
website.

HSBC believes an investor's decision to buy or sell a stock should depend on individual circumstances such as the investor's
existing holdings and other considerations. Different securities firms use a variety of ratings terms as well as different rating
systems to describe their recommendations. Investors should carefully read the definitions of the ratings used in each research
report. In addition, because research reports contain more complete information concerning the analysts' views, investors
should carefully read the entire research report and should not infer its contents from the rating. In any case, ratings should not
be used or relied on in isolation as investment advice.

Rating definitions for long-term investment opportunities

Stock ratings
HSBC assigns ratings to its stocks in this sector on the following basis:

For each stock we set a required rate of return calculated from the risk free rate for that stock's domestic, or as appropriate,
regional market and the relevant equity risk premium established by our strategy team. The price target for a stock represents
the value the analyst expects the stock to reach over our performance horizon. The performance horizon is 12 months. For a
stock to be classified as Overweight, the implied return must exceed the required return by at least 5 percentage points over the
next 12 months (or 10 percentage points for a stock classified as Volatile*). For a stock to be classified as Underweight, the
stock must be expected to underperform its required return by at least 5 percentage points over the next 12 months (or 10
percentage points for a stock classified as Volatile*). Stocks between these bands are classified as Neutral.

Our ratings are re-calibrated against these bands at the time of any 'material change' (initiation of coverage, change of volatility
status or change in price target). Notwithstanding this, and although ratings are subject to ongoing management review,
expected returns will be permitted to move outside the bands as a result of normal share price fluctuations without necessarily
triggering a rating change.

*A stock will be classified as volatile if its historical volatility has exceeded 40%, if the stock has been listed for less than 12
months (unless it is in an industry or sector where volatility is low) or if the analyst expects significant volatility. However,

9
 Housing Development & Infrastructure Ltd (HDIL)
Real Estate abc
7 October 2009

stocks which we do not consider volatile may in fact also behave in such a way. Historical volatility is defined as the past
month's average of the daily 365-day moving average volatilities. In order to avoid misleadingly frequent changes in rating,
however, volatility has to move 2.5 percentage points past the 40% benchmark in either direction for a stock's status to change.

Prior to this, from 7 June 2005 HSBC applied a ratings structure which ranked the stocks according to their notional target
price vs current market price and then categorised (approximately) the top 40% as Overweight, the next 40% as Neutral and
the last 20% as Underweight. The performance horizon is 2 years. The notional target price was defined as the mid-point of the
analysts' valuation for a stock.

From 15 November 2004 to 7 June 2005, HSBC carried no ratings and concentrated on long-term thematic reports which
identified themes and trends in industries, but did not make a conclusion as to the investment action that potential investors
should take.

Prior to 15 November 2004, HSBC's ratings system was based upon a two-stage recommendation structure: a combination of
the analysts' view on the stock relative to its sector and the sector call relative to the market, together giving a view on the
stock relative to the market. The sector call was the responsibility of the strategy team, set in co-operation with the analysts.
For other companies, HSBC showed a recommendation relative to the market. The performance horizon was 6-12 months. The
target price was the level the stock should have traded at if the market accepted the analysts' view of the stock.

Rating distribution for long-term investment opportunities

As of 07 October 2009, the distribution of all ratings published is as follows:
Overweight (Buy) 36% (33% of these provided with Investment Banking Services)
Neutral (Hold) 41% (28% of these provided with Investment Banking Services)
Underweight (Sell) 23% (30% of these provided with Investment Banking Services)

Share price and rating changes for long-term investment opportunities

Housing Development & Inf (HDIL.BO) Share Price performance INR Vs HSBC Recommendation & price target history
rating history From To Date
N/A Overweight (V) 14 September 2008
Overweight (V) Neutral (V) 03 November 2008
1063 Target Price Value Date
863 Price 1 365.00 14 September 2008
Price 2 154.00 03 November 2008
663 Price 3 100.00 29 January 2009
463 Source: HSBC

263
63
Oct-04

Oct-05

Oct-06

Oct-07

Oct-08

Oct-09
Apr-05

Apr-06

Apr-07

Apr-08

Apr-09

Source: HSBC

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 Housing Development & Infrastructure Ltd (HDIL)
Real Estate abc
7 October 2009

HSBC & Analyst disclosures

None of the below disclosures applies to any of the stocks featured in this report.
1 HSBC* has managed or co-managed a public offering of securities for this company within the past 12 months.
2 HSBC expects to receive or intends to seek compensation for investment banking services from this company in the next
3 months.
3 At the time of publication of this report, HSBC Securities (USA) Inc. is a Market Maker in securities issued by this
company.
4 As of 31 August 2009 HSBC beneficially owned 1% or more of a class of common equity securities of this company.
5 As of 31 August 2009, this company was a client of HSBC or had during the preceding 12 month period been a client of
and/or paid compensation to HSBC in respect of investment banking services.
6 As of 31 August 2009, this company was a client of HSBC or had during the preceding 12 month period been a client of
and/or paid compensation to HSBC in respect of non-investment banking-securities related services.
7 As of 31 August 2009, this company was a client of HSBC or had during the preceding 12 month period been a client of
and/or paid compensation to HSBC in respect of non-securities services.
8 A covering analyst/s has received compensation from this company in the past 12 months.
9 A covering analyst/s or a member of his/her household has a financial interest in the securities of this company, as
detailed below.
10 A covering analyst/s or a member of his/her household is an officer, director or supervisory board member of this
company, as detailed below.
11 At the time of publication of this report, HSBC is a non-US Market Maker in securities issued by this company and/or in
securities in respect of this company

Analysts are paid in part by reference to the profitability of HSBC which includes investment banking revenues.

For disclosures in respect of any company, please see the most recently published report on that company available at
www.hsbcnet.com/research.

* HSBC Legal Entities are listed in the Disclaimer below.

Additional disclosures
1 This report is dated as at 07 October 2009.
2 All market data included in this report are dated as at close 06 October 2009, unless otherwise indicated in the report.
3 HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its
Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research
operate and have a management reporting line independent of HSBC's Investment Banking business. Chinese Wall
procedures are in place between the Investment Banking and Research businesses to ensure that any confidential and/or
price sensitive information is handled in an appropriate manner.

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 Housing Development & Infrastructure Ltd (HDIL)
Real Estate abc
7 October 2009

Disclaimer
* Legal entities as at 22 October 2008 Issuer of report
'UAE' HSBC Bank Middle East Limited, Dubai; 'HK' The Hongkong and Shanghai Banking HSBC Securities and Capital
Corporation Limited, Hong Kong; 'TW' HSBC Securities (Taiwan) Corporation Limited; 'CA' Markets (India) Private Limited
HSBC Securities (Canada) Inc, Toronto; HSBC Bank, Paris branch; HSBC France; 'DE' HSBC
Trinkaus & Burkhardt AG, Dusseldorf; 000 HSBC Bank (RR), Moscow; 'IN' HSBC Securities Registered Office
and Capital Markets (India) Private Limited, Mumbai; 'JP' HSBC Securities (Japan) Limited, 52/60 Mahatma Gandhi Road
Tokyo; 'EG' HSBC Securities Egypt S.A.E., Cairo; 'CN' HSBC Investment Bank Asia Limited, Fort, Mumbai 400 001, India
Beijing Representative Office; The Hongkong and Shanghai Banking Corporation Limited, Telephone: +91 22 2267 4921
Singapore branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities Fax: +91 22 2263 1983
Branch; HSBC Securities (South Africa) (Pty) Ltd, Johannesburg; 'GR' HSBC Pantelakis
Website: www.research.hsbc.com
Securities S.A., Athens; HSBC Bank plc, London, Madrid, Milan, Stockholm, Tel Aviv, 'US'
HSBC Securities (USA) Inc, New York; HSBC Yatirim Menkul Degerler A.S., Istanbul; HSBC
México, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, HSBC Bank Brasil S.A. -
Banco Múltiplo, HSBC Bank Australia Limited, HSBC Bank Argentina S.A., HSBC Saudi Arabia
Limited.
This document has been issued by HSBC Securities and Capital Markets (India) Private Limited ("HSBC") for the information of its customers only. HSBC
Securities and Capital Markets (India) Private Limited is regulated by the Securities and Exchange Board of India. If it is received by a customer of an affiliate
of HSBC, its provision to the recipient is subject to the terms of business in place between the recipient and such affiliate. This document is not and should not
be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. HSBC has based this document on information
obtained from sources it believes to be reliable but which it has not independently verified; HSBC makes no guarantee, representation or warranty and accepts
no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of the Research Division of HSBC only and are subject to
change without notice. HSBC and its affiliates and/or their officers, directors and employees may have positions in any securities mentioned in this document
(or in any related investment) and may from time to time add to or dispose of any such securities (or investment). HSBC and its affiliates may act as market
maker or have assumed an underwriting commitment in the securities of companies discussed in this document (or in related investments), may sell them to or
buy them from customers on a principal basis and may also perform or seek to perform investment banking or underwriting services for or relating to those
companies and may also be represented in the supervisory board or any other committee of those companies. The information and opinions contained within the
research reports are based upon publicly available information and rates of taxation applicable at the time of publication which are subject to change from time
to time. Past performance is not necessarily a guide to future performance. The value of any investment or income may go down as well as up and you may not
get back the full amount invested. Where an investment is denominated in a currency other than the local currency of the recipient of the research report,
changes in the exchange rates may have an adverse effect on the value, price or income of that investment. In case of investments for which there is no
recognised market it may be difficult for investors to sell their investments or to obtain reliable information about its value or the extent of the risk to which it is
exposed.
HSBC Securities (USA) Inc. accepts responsibility for the content of this research report prepared by its non-US foreign affiliate. All U.S. persons receiving
and/or accessing this report and wishing to effect transactions in any security discussed herein should do so with HSBC Securities (USA) Inc. in the United
States and not with its non-US foreign affiliate, the issuer of this report.
In the UK this report may only be distributed to persons of a kind described in Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2001. The protections afforded by the UK regulatory regime are available only to those dealing with a representative of HSBC Bank plc in
the UK. In Singapore, this publication is distributed by The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch for the general
information of institutional investors or other persons specified in Sections 274 and 304 of the Securities and Futures Act (Chapter 289) (“SFA”) and accredited
investors and other persons in accordance with the conditions specified in Sections 275 and 305 of the SFA. This publication is not a prospectus as defined in
the SFA. It may not be further distributed in whole or in part for any purpose. The Hongkong and Shanghai Banking Corporation Limited Singapore Branch is
regulated by the Monetary Authority of Singapore. In Australia, this publication has been distributed by The Hongkong and Shanghai Banking Corporation
Limited (ABN 65 117 925 970, AFSL 301737) for the general information of its “wholesale” customers (as defined in the Corporations Act 2001). Where
distributed to retail customers, this research is distributed by HSBC Bank Australia Limited (AFSL No. 232595). These respective entities make no
representations that the products or services mentioned in this document are available to persons in Australia or are necessarily suitable for any particular
person or appropriate in accordance with local law. No consideration has been given to the particular investment objectives, financial situation or particular
needs of any recipient.
In Japan, this publication has been distributed by HSBC Securities (Japan) Limited. In Hong Kong, this document has been distributed by The Hongkong and
Shanghai Banking Corporation Limited in the conduct of its Hong Kong regulated business for the information of its institutional and professional customers; it
is not intended for and should not be distributed to retail customers in Hong Kong. The Hongkong and Shanghai Banking Corporation Limited makes no
representations that the products or services mentioned in this document are available to persons in Hong Kong or are necessarily suitable for any particular
person or appropriate in accordance with local law. All inquiries by such recipients must be directed to The Hongkong and Shanghai Banking Corporation
Limited.
© Copyright. HSBC Securities and Capital Markets (India) Private Limited 2009, ALL RIGHTS RESERVED. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior
written permission of HSBC Securities and Capital Markets (India) Private Limited. MICA (P) 177/08/2009

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Indian Research Team

India Singapore
Roopesh Patel Economics
Head of Research, India Robert Prior-Wandesforde
+91 22 2268 1271 roopeshpatel@hsbc.co.in Economist
+65 6239 0840 robert.prior-wandesforde@hsbc.com.sg
Automobiles
Sachin Gupta Hong Kong
Analyst
+91 22 2268 1079 sachin1gupta@hsbc.co.in Banks
Todd Dunivant
Banks Analyst
Sachin Sheth +852 2996 6599 tdunivant@hsbc.com.hk
Analyst
+91 22 2268 1224 sachinsheth@hsbc.co.in Telecom
Tucker Grinnan
Saumya Agarwal Analyst
Analyst +852 2822 4686 tuckergrinnan@hsbc.com.hk
+91 22 2268 1235 saumyaagarwal@hsbc.co.in
Global
Construction Materials, Metals & Mining
Jatin Kotian Strategy
Analyst Garry Evans
+91 22 2268 1638 jatinkotian@hsbc.co.in Global Head of Equity Strategy
+852 2996 6916 garryevans@hsbc.com.hk
Consumer & Retail
Percy Panthaki
Analyst
+91 22 2268 1240 percypanthaki@hsbc.co.in
Electric Utilities, Machinery, Transport Infrastructure
Sumeet Agrawal
Analyst
+91 22 2268 1243 sumeetagrawal@hsbc.co.in
Infrastructure, Real Estate
Ashutosh Narkar
Analyst
+91 22 2268 1474 ashutoshnarkar@hsbc.co.in
IT Services
Yogesh Aggarwal
Analyst
+91 22 2268 1246 yogeshaggarwal@hsbc.co.in
Oil & Gas
Kirtan Mehta, CFA
Analyst
+91 80 3001 3779 kirtanmehta@hsbc.co.in
Small & Mid-cap
Sandeep Somani
Analyst
+91 22 2268 1245 sandeepsomani@hsbc.co.in
Telecom
Rajiv Sharma
Analyst
+91 22 2268 1239 rajivsharma@hsbc.co.in
Strategy
Vivek R Misra
Strategist
+91 80 3001 3699 vivekmisra@hsbc.co.in