Market Outlook

India Research
November 1, 2011

Dealers Diary
The Indian markets are expected to open with a negative bias on the back of negative cues from Asian, European as well as US markets. Asian stocks fell for a second day after Greek PM George Papandreou pledged to put the European Unions agreement on financing for Greece to a referendum and Chinas manufacturing grew at a slower pace. The US markets closed their best month in 20 years on a down note on Monday as the failure of trading firm MF Global Holdings and new worries about Europe's debt crisis hammered financial shares. In a sign that Europe's woes were far from over, Italian and Spanish bond yields soared, prompting the European Central Bank to buy the debt, while shares of European banks came under heavy selling pressure.

Domestic Indices BSE Sensex Nifty MID CAP SMALL CAP BSE HC BSE PSU BANKEX AUTO METAL OIL & GAS BSE IT Global Indices Dow Jones NASDAQ FTSE Nikkei Hang Seng Straits Times Shanghai Com

Chg (%) (0.6) (0.6) 0.4 0.2 (0.6) (0.8) 0.7 (1.0) (2.0) (2.1) (0.0) Chg (%) (2.3) (1.9) (2.8) (0.7) (0.8) (1.7) (0.2)

(Pts) (99.8) (34.1) 23.1 14.9 (34.3) (60.9) 81.5 (93.9) (238.6) (191.7) (2.0) (Pts) (52.7) (158.0) (62.1) (154.4) (50.0) (5.2)

(Close) 17,705 5,327 6,298 6,975 6,136 7,555 11,454 9,477 11,904 8,988 5,828 (Close) 2,684 5,544 8,988 19,865 2,856 2,468

The Indian markets would also be watching out for monthly external trade (due for release today) and Purchasing Managers Index data (Manufacturing PMI due for today and Services PMI expected on November 5).

Markets Today
The trend deciding level for the day is 17,729 / 5,334 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,789 17,874 / 5,353 5,379 levels. However, if NIFTY trades below 17,729 / 5,334 levels for the first half-an-hour of trade then it may correct up to 17,644 17,584 / 5,307 5,288 levels.
Indices SENSEX NIFTY S2 17,584 5,288 S1 17,644 5,307 R1 17,789 5,353 R2 17,874 5,379

(276.1) 11,955

Indian ADRs Infosys Wipro ICICI Bank HDFC Bank

Chg (%) (2.7) (3.1) (4.4) (2.3)

(Pts) (1.7) (0.3) (1.7) (0.8)

(Close) $58.6 $10.5 $37.2 $31.7

News Analysis
IVRCL bags orders worth `972cr 2QFY2012 Result Reviews ICICI Bank, NMDC, Wipro, HUL, BoB, Canara Bank, Dabur, Colgate, Indian Bank, OBC, Corporation Bank, UCO Bank, J&K Bank, IPCA Labs, Vijaya Bank, Dena Bank, United Bank of India, LMW, Greenply Industries, Subros 2QFY2012 Result Previews Punjab National Bank, Ambuja Cements, ACC
Refer detailed news analysis on the following page

Advances / Declines Advances Declines Unchanged

BSE 1,494 1,354 108

NSE 745 693 64

Net Inflows (October 28, 2011)

` cr FII MFs ` cr Index Futures Stock Futures Purch 5,568 688 Sales 3,207 845 Purch 1,483 1,202 Gainers Company Price (`) chg (%) Company Net 2,360 (157) Sales 1,717 1,784 Net (234) (583) MTD 1,987 (212) YTD 34 5,285 Open Interest 15,894 28,360 Losers Price (`) chg (%)

Volumes (` cr) BSE NSE 2,191 10,713

FII Derivatives (October 31, 2011)

Gainers / Losers

Vijaya Bank Hindustan Unilever Dena Bank Uco Bank Indian Bank

61 375 81 75 217

9.5 7.4 6.0 6.0 5.9

Oriental Bank Hindalco Inds Sterlite Inds Tata Motors Power Finance

290 136 127 198 150

(4.7) (4.1) (4.1) (3.8) (3.3)

Please refer to important disclosures at the end of this report

Sebi Registration No: INB 010996539

Market Outlook | India Research

IVRCL bags orders worth `972cr

IVRCL has bagged orders aggregating to `972cr across its transportation and mining divisions. The transportation division is the major contributor with orders worth `918cr. The mining division contributed orders worth `54cr. With these orders, IVRCLs order book stands at ~`25,303cr (4.5x FY2011 revenue). This is positive for the company as there has been a dry spell of order inflow across sectors since the last couple of quarters with the road sector being the only exception. We have valued IVRCL on an SOTP basis. The companys core construction business is valued at P/E of 7x FY2013E EPS of `6.1 (`42.7/share), whereas its stake in subsidiaries IVRCLAH (`12.8/share) and Hindustan Dorr-Oliver (`4.5/share) has been valued on mcap basis, post assigning a 20% holding company discount. At the CMP of `41, the stock is trading at P/E of 6.8x FY2013E EPS and 0.5x FY2013E P/BV on a standalone basis and adjusting for its subsidiaries at P/E of 3.9x FY2013E EPS, which we believe is at attractive valuations. Therefore, on the back of the companys robust order book-to-sales ratio and attractive valuations, we maintain our Buy recommendation on the stock with a target price of `60.

Result Reviews ICICI Bank

For 2QFY2012, ICICI Banks standalone net profit grew by reasonable 21.6% yoy to `1,503cr, in-line with ours as well as streets estimates. Sequentially stable NIM and asset quality were the key highlights of the results. Continued reduction in NPA provisioning burden drove net profit growth. Stable NIM and asset quality: During 2QFY2012, the banks business momentum picked up a bit as compared to the previous quarter, with advances growing by 6.0% qoq (up 20.5% yoy) and deposits increasing by 6.3% qoq (moderate 9.9% yoy growth). Overall CASA deposits growth was muted 5.1% yoy, dragged down by a 5.3% yoy decline in current account deposits. Saving account deposits growth was relatively better at 10.9% yoy. Though period-end CASA ratio improved marginally to 42.1%, average CASA ratio declined by ~200bp qoq to ~38%. Reported NIM remained flat both on a sequential and on a yoy basis at 2.6% as the higher yields were offset by higher funding costs. Domestic NIM compressed marginally by 10bp qoq to ~2.9%; however, international NIM improved by ~20bp qoq to 1.1%, in-line with managements guidance. Growth in fee income continued to be below expectations at 7.0% yoy, as slower new project announcements and lower financial closures of projects affected fee income. Employee expenses rose considerably by 35.0% yoy, primarily due to higher headcount. Provisioning expenses declined by a substantial 50.3% yoy to `319cr on the back of reduced share of unsecured credit portfolio of the bank. Asset quality remained largely stable with gross NPAs remaining flat sequentially and net NPAs declining by 5.2% qoq. Provision coverage ratio (as per the RBIs guidelines) remained healthy at 78.2% (76.9% in 1QFY2012).
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Market Outlook | India Research

At the CMP, the banks core banking business (after adjusting for subsidiaries) is trading at 1.8x FY2013E ABV (including subsidiaries at 1.7x FY2013E ABV). We maintain our Buy recommendation on the stock with a target price of `1,114.

NMDC
NMDCs net sales grew by 24.5% yoy to `3,062cr (in-line with our estimate of `2,917cr) mainly due to higher iron ore realization as well as sales volume. EBITDA increased by 32.3% yoy to `2,435cr, as EBITDA margin expanded by 471bp yoy to 79.5%. Other income grew by 104.6% yoy to `503cr. Consequently, net profit increased by 42.4% yoy to `1,963cr (above our estimate of `1,844cr) in 2QFY2012. The stock is under review currently.

Wipro
For 2QFY2012, Wipro reported better-than-expected results. The companys IT services revenue came in at US$1,472.5mn, up merely 4.6% qoq, primarily led by volume growth of 6.0% qoq. However, pricing (on a reported basis) onsite and offshore again declined by 0.4% and 4.1% qoq, respectively, due to closure of few fixed price projects during the quarter. The revenue figures include US$46mn from SAICs oil and gas business, which Wipro acquired in April 2011 and got fully integrated in 2QFY2012. On an organic basis (excluding SAIC), revenue growth stood at 2.9% qoq. Volume growth for the global IT business of the IT services segment came in at 6.0% qoq, led by whopping 9.0% qoq growth in onsite volumes; offshore volume growth was at 4.7% qoq. On an organic basis, volume growth stood at 4.6% qoq. In INR terms, revenue of the IT services segment came in at `6,829cr, up 6.6% qoq. The IT products segment reported a 6.4% yoy decline in revenue to `1,001cr during the quarter. The consumer care and lightening segment emerged as the primary growth driver for the company by posting 20.3% yoy growth in revenue to `800cr. On a consolidated level, Wipros revenue came in at `9,095cr, up 6.2% qoq. EBIT margin for IT services declined by 200bp qoq to 20.0% due to 1) negative impact of wage hikes given from June 1, 2011, and 2) lower operating margin of SAIC. EBIT margin for the consumer care and lightening segment continued its declining momentum and dropped off by 84bp qoq to 11.0%. However, EBIT margin of the IT products business improved by 30bp qoq to 4.2%. On a consolidated level, Wipros EBITDA and EBIT margins declined by 106bp and 110bp qoq to 19.1% and 16.4%, respectively. PAT came in at `1,301cr. During 2QFY2012, the companys growth was modest on account of revenue from SAIC; however, organically Wipro continues to lag its peers. We maintain our Neutral rating on the stock.

November 1, 2011

Market Outlook | India Research

HUL
HUL posted robust set of numbers for the quarter, marginally above our estimates. The companys top line grew by 18% yoy to `5,522cr (`4,681cr). At the operating level, OPM expanded by 134bp yoy despite a 344bp yoy increase in gross margin, primarily due to a 202bp yoy decrease in ad spends and a 273bp yoy decline in other expenditure. Recurring earnings for the quarter grew by 22.6% yoy, above our estimates, robust top-line growth and high other income. Other key highlights of the results include 1) 21.8% yoy revenue growth in the S&D segment, EBIT margin contracted by 65bp yoy to 12.4%, 2) food business showed growth of 20.9% yoy and 3) personal products grew by 18.2% yoy, eighth consecutive quarter of double-digit volume-led growth and 4) beverages grew by 14.6% yoy. The stock rating is under review.

Bank of Baroda
For 2QFY2012, Bank of Baroda reported reasonable 14.4% yoy growth in its net profit to `1,166cr, above our estimate of `1,088cr, primarily due to considerably better operating income than built in by us, which was largely offset by higher provisioning expenses. Sequential expansion in NIM coupled with persistence of healthy asset-quality trends were the key positive takeaways from the results. Sequential expansion in NIM coupled with healthy asset-quality trends: For 2QFY2012, the banks overall business momentum remained moderate, with advances growing by 2.9% qoq (up 23.9% yoy) and deposits increasing by 5.2% qoq (22.1% yoy). Global saving account deposits were relatively better at 15.5% yoy. However, slower (5.7% yoy) growth in current account deposits led to a ~200bp yoy compression in calculated global CASA ratio to 27.4%. The sharp 91bp qoq expansion in yield on advances vis--vis a 43bp qoq rise in cost of deposits led to a 28bp qoq expansion in reported domestic NIM to 3.7%. Fee-based income rose reasonably by 13.2% yoy. Recoveries from written-off accounts witnessed a robust 76.4% yoy rise to `122cr during 2QFY2012. On the asset-quality front, the bank continued to surprise positively with annualized slippage ratio in check at 1.0%. Absolute amount of gross NPAs declined on a qoq basis, albeit marginally. Gross and net NPA ratios remained largely flat on a sequential basis at 1.4% and 0.5%, respectively. Provisioning expenses were considerably higher than expected as the bank chose to maintain its provision coverage ratio (including technical write-offs) at elevated levels of 82.0%. At the CMP, the stock is trading at 1.1x FY2013E ABV. We maintain our Accumulate rating on the stock with a target price of `881.

Canara Bank
For 2QFY2012, Canara Bank registered a 15.4% yoy decline in its net profit, in-line with our expectations. However, provisioning expenses were considerably higher than expected, which were offset by stronger NII and healthy rise in other income (driven by recoveries from written-off accounts and higher trading profits).

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Market Outlook | India Research

Higher slippages continued, with the bank completing the switchover to systembased NPA recognition platform. NIM improves in-line with peers; slippages remain elevated: For 2QFY2012, the banks overall business momentum remained moderate, with advances increasing marginally by 1.4% qoq (up 23.8% yoy) and deposits accretion rising by 4.1% qoq (increased by 25.4% yoy). Saving account deposits growth was relatively healthy at 17.9% yoy; however, the 5.3% yoy decrease in current account balances pulled down overall CASA deposits growth to 12.2% yoy. CASA ratio improved, albeit marginally by 50bp, to 25.8% (down by ~300bp yoy). A relatively faster (22bp qoq) rise in yield on advances vis--vis an 8bp qoq rise in cost of deposits led to a 22bp sequential improvement in reported NIM to 2.6%. Other income growth was robust 65.8% yoy, driven by doubling of recoveries from written-off accounts and substantially higher trading profits. On the asset-quality front, slippages continued to remain at elevated levels as the bank completed the migration to system-based NPA recognition platform. Annualized slippage ratio, though came off a bit from 2.6% witnessed in 1QFY2012, remained high at 2.3%. However, the rise in NPAs was largely contained on the back of higher recoveries and aggressive write-offs. Gross and net NPA ratios remained largely stable at 1.73% (1.67% in 1QFY2012) and 1.43% (1.34% in 1QFY2012), respectively. At the CMP, the stock is trading at 0.9x FY2013E ABV. We maintain our Neutral stance on the stock.

Dabur
Dabur reported an impressive performance for 2QFY2012 on the top-line front, above our estimates. Top-line growth was strong at 30%, marginally above our estimates, driven by 10% volume growth to `1,262cr. Earnings grew by 8.4% yoy, in-line with our estimates, despite margin contracting to `174cr. Operating margin for the quarter declined by 213bp yoy and came in at 18.6%. Key highlights for the quarter include: 1) the company merged the consumer healthcare division with the consumer care division to synergize the distribution, 2) Dabur Lanka Pvt. Ltd., a wholly owned subsidiary of Dabur International Ltd., was incorporated for setting up the new fruit juice facility near Colombo it has plans to invest `70cr over two years and 3) the domestic businesss organic growth came in at 11% yoy and international business excluding the recent acquisitions grew by 22.8% yoy. At the CMP, the stock is trading at 22x FY2013E EPS. We maintain our Accumulate view on the stock with a target price of `115.

Colgate
Colgate reported a weak performance for 2QFY2012. The company registered top-line growth of 19% yoy to `657cr, driven by 13% yoy volume growth. Earnings for the quarter registered a decline of 0.6% yoy to `100cr (`122cr), beating our estimates by 7.3%, despite an 8.4% jump in other income. High ad spends on account of new product launches dragged the companys earnings. On the operating front, the company delivered margin contraction of 321bp yoy to 17.1% (26.3%), significantly below our estimates, largely on account of a sharp jump in ad spends due to launch of premium products. We recommend Neutral on the stock.
November 1, 2011

Market Outlook | India Research

Indian Bank
For 2QFY2012, Indian Bank reported a healthy set of numbers with net profit growing by 12.7% yoy to 469cr, above our estimates, mostly due to higher noninterest income than estimated by us. Aided by a 33bp sequential rise in reported NIM to 3.8%, net interest income registered healthy growth of 10.2% qoq (up 15.5% yoy) to `1,135cr. Non-interest income was also strong, registering growth of 20.7% yoy (robust 37.3% qoq) to `342cr. The bank had already shifted to system-based NPA recognition during FY2011 and, hence, did not see any material rise in its NPA ratios. Gross NPA ratio as of 2QFY2012 stood at 1.2% (1.0% in 1QFY2012), while net NPA ratio stood at 0.7% (0.5% in 1QFY2012). Provisioning coverage ratio, however, witnessed a sequential decline of 479bp to 79.4%. Business momentum was strong during the quarter with advances growing by 23.4% yoy and deposits growing by 18.6% yoy. At the CMP, the stock is trading at 0.8x FY2013 ABV. We recommend a Neutral view on the stock.

Oriental Bank of Commerce

For 2QFY2012, Oriental Bank of Commerce reported a poor set of numbers, with profit declining by 57.8% yoy and 52.7% qoq to `168cr. The results were significantly below are estimates due to high provisioning expenses incurred by the bank in 2QFY2012. Asset quality of the bank deteriorated sharply during 2QFY2012, with gross NPA ratio at 2.95% (2.1% in 1QFY2012) and net NPA ratio at 1.9% (1.1% in 1QFY2012). Net interest income declined by 8.1% yoy, while non-interest income registered strong growth of 29.6% yoy. NIM declined by 14bp sequentially, a deviation from the overall trend in the industry. On the business side, advances grew by 20.6% yoy and deposits grew by 18.9% yoy. At the CMP, the stock is trading at 0.7x FY2013 ABV. We recommend an Accumulate recommendation on the stock with a target price of `314.

Corporation Bank
For 2QFY2012, Corporation Bank registered 14.0% yoy net profit growth to `401cr, above our estimate of `349cr, mainly on account of better-than-expected operating income on the back of stronger other income and lower effective tax rate than built in by us. However, the bank surprised negatively on the asset-quality front, with absolute gross and net NPAs rising sharply by 27.3% qoq and 81.0% qoq, respectively. Consequently, gross and net NPA ratios deteriorated to 1.3% (from 1.1% in 1QFY2012) and 0.9% (from 0.5% in 1QFY2012), respectively. Business growth trends for the bank remained moderate, with advances rising by 17.0% yoy and deposits increasing by 24.5% yoy. Calculated NIM for the quarter improved by ~12bp qoq. Consequent to the rise in NPAs, provisioning expenses came in well ahead of our expectations, which were partially offset by a lower effective tax rate. At the CMP, we believe the stock is trading at attractive valuations of 0.7x FY2013E ABV. Hence, we recommend an Accumulate on the stock with a target price of `483.

November 1, 2011

Market Outlook | India Research

UCO Bank
For 2QFY2012, UCO Bank reported a 93.6% yoy increase (down 21.1% qoq) to `231cr, above our estimates, mostly due to higher net interest income than estimated by us. Calculated net interest margin witnessed a sharp sequential improvement of 61bp. Asset quality of the bank, however, continued to be under pressure as the bank switched over accounts worth `50lakhs and below to systembased NPA during 2QFY2012. Gross NPA ratio as of 2QFY2012 stood at 3.6% (3.5% in 1QFY2012), while net NPA ratio stood at 2.1% (2.1% in 1QFY2012). The bank shrunk its loan portfolio during 2QFY2012, with advances declining by 0.6% (up 12.5% yoy). Deposits for the bank grew by 3.0% qoq (up 8.5% yoy). At the CMP, the stock is trading at 0.9x. We maintain our Neutral rating on the stock.

Jammu and Kashmir Bank

For 2QFY2012, J&K Bank reported healthy 22.3% growth in net profit to `200cr, higher than our expectations, mostly on account of lower provisioning expenses than estimated by us. Net interest income grew by healthy 16.5% yoy, however, non-interest income declined by 4.4% yoy. The bank had already shifted to systembased NPA recognition and, hence, did not see any material rise in its NPA ratios. Gross NPA ratio as of 2QFY2012 stood at 1.8% (2.0% in 1QFY2012), while net NPA ratio stood at 0.2% (0.2% in 1QFY2012). Provisioning coverage ratio including technical write-offs stood at healthy 92.0%. At the CMP, the stock is trading at 0.9x FY2013 ABV, which we feel factors in all the positives. Hence, we maintain our Neutral view on the stock.

IPCA Labs
IPCA Labs reported higher-than-expected performance for 2QFY2012. The companys net sales came in at `618cr, reporting growth of 20.2% yoy, mainly driven by exports, which grew by 40.4% yoy, with formulation and API segment registering growth of 48.8% and 21.3%, respectively. Exports contributed around 57.1% of sales in 2QFY2012 vs. 48.9% in 2QFY2011. Domestic sales, on the other hand, were flat at `264.8cr mainly on the back of low yoy 3.3% growth in domestic formulation sales. At

the CMP, the stock trades at 12.7x FY2012E and 9.2x FY2013E, respectively. We maintain our Buy recommendation on the stock with a target price of `358.

Vijaya Bank
For 2QFY2012, Vijaya Bank reported a decent set of numbers, which were considerably higher than our expectations partly on account of interest income on income tax refund of `75cr. Overall, results surprised positively with the absolute amount of both gross and net NPAs declining sequentially. Advances growth was healthy on a yoy basis at 36.4% and deposits growth was also ahead of peers at 24.1% yoy. Calculated NIM of the bank improved sharply by 35bp qoq. Gross and net NPA ratios of the bank improved to 2.5% (from 2.8% in 1QFY2012) and 1.4% (from 1.7% in 1QFY2012). Provision coverage ratio (including technical write-offs)
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Market Outlook | India Research

improved by ~270bp qoq to 66.1%. At the CMP, the stock is trading at 0.8x FY2013E ABV. We maintain our Neutral stance on the stock.

Dena Bank
For 2QFY2012, Dena Bank registered healthy 20.5% yoy growth to `194cr, above our estimates due to lower provisioning expenses than estimated by us. Reported NIM increased by 32bp sequentially, leading to a 10.7% yoy increase in net interest income to `515cr. Asset quality of the bank held up pretty well, in spite of switchover to `50lakhs and below accounts to system-based NPA recognition during 2QFY2012. Gross NPA ratio as of 2QFY2012 stood at 1.93% (1.86% in 1QFY2012) and net NPA ratio stood at 1.15% (1.08% in 1QFY2012). The pace in business was slow during 2QFY2012, with advances growing by 0.3% qoq (18.0% yoy) and deposits growing by 1.6% qoq (20.1% yoy). On the back of lower growth in deposits, the bank was able to sequentially increase its CASA ratio by 45bp to 35.6%. At the CMP, the stock is trading at 0.6x FY2013 ABV. Currently, we have a Neutral recommendation on the stock.

United Bank
For 2QFY2012, United Bank registered 13.7% yoy growth in its net profit to `125cr, above our estimates due to higher non-interest income than estimated by us. Calculated NIM improved by 24bp sequentially, leading to strong 9.6% qoq growth in net interest income. Asset quality of the bank continued to be under pressure during 2FY2012, with gross NPA ratio of 3.5% (2.9% in 1QFY2012) and 2.2% (1.7% in 1QFY2012). Advances growth for the bank was healthy at 17.3% yoy and deposit growth came in at 13.3%. The banks operating expenses only increased by 3.7% yoy due to which it was able to improve its cost-to-income ratio to 42.7% compared to 47.7% in 1QFY2012. At the CMP, the stock is trading at 0.6x FY2013 ABV. We recommend an Accumulate rating on the stock with a target price of `82. We may revise our target post the con-call/analyst meet.

Lakshmi Machine Works

Lakshmi Machine Works (LMW) reported strong top-line growth for 2QFY2012. The companys net sales grew by 31.2% yoy to `582cr (`443cr). LMW reported a 226bp yoy contraction in OPM to 15.3% (17.5%), largely on the back of increased consumption of raw material as a percentage of sales by 342bp yoy to 59.8% (56.4%).Operating profit increased by 14.3% yoy to `89cr (`78cr) on the back of higher revenue during the quarter. Net profit increased by 7.4% yoy to `49cr (`46cr). Net profit margin declined by 188bp yoy to 8.5% (10.4%). We continue to maintain our Buy recommendation on the stock. We will be coming with a detailed report post management interaction.

November 1, 2011

Market Outlook | India Research

Greenply Industries
Greenply Industries (GIL) registered strong top-line growth in 2QFY2012. The companys net sales grew by 43.1% yoy to `414cr. GIL reported a 110bp yoy expansion in OPM to 8.9% (7.8%), largely on the back of lower staff cost and consumption of raw materials as a percentage of sales. The company reported forex loss of `11cr during the quarter. Operating profit increased by 63.3% yoy to `37cr (`23cr) on the back of higher revenue and margin expansion during the quarter. Net profit increased by 537% yoy to `10cr (`1.6cr). Net profit margin increased by 189bp yoy to 2.4% (0.5%). We continue to maintain our Buy recommendation on the stock. We will be coming with a detailed report post management interaction.

Subros
Subros posted a poor set of results for 2FY2012. Net sales registered a 13.6% yoy (4.6% qoq) decline in net sales to `240.5cr, largely due to the 24% yoy (9.8% qoq) decline in volumes. Lower volumes can be attributed to general slowdown in the passenger car industry and slowdown in volumes of its major clients, Maruti Suzuki and Tata Motors. Average net realization, however, grew by 13.8% yoy (5.7% qoq), arresting further decline in the top line. Operating margin witnessed an expansion of 116bp yoy to 7.9%, led by a 716bp yoy fall in raw-material expenses. On the other hand, a 279bp and 322bp yoy increase in other expenditure and staff cost restricted further yoy margin expansion. Sequentially, operating margin contracted by 202bp yoy because of the sharp increase in staff cost. Net profit registered a substantial decline of 35.9% yoy (61% qoq) to `3.1cr mainly due to the 44.2% yoy increase in interest expense. The stock rating is currently under review.

Result Previews Punjab National Bank

Punjab National Bank is scheduled to announce its 2QFY2012 results. We expect the bank to report moderate 6.4% yoy growth in its net interest income. However, non-interest income growth is expected to come in at healthy 29.8% yoy, leading to a 11.0% yoy rise in operating income. Provisioning expenses are expected to rise sharply by 57.9% yoy, leading to a 3.5% decline in PBT. On the net profit front, we expect the bank to report a 3.9% decline on a yoy basis to `1,033cr. At the CMP, the stock is trading at 1.1x FY2013E ABV. We maintain our Accumulate stance on the stock with a target price of `1,085.

Ambuja Cements 3QCY2011

Ambuja Cements is expected to announce its 3QCY2011 results. On the top-line front, the company is expected to post robust growth of 25.1% yoy to `1,957cr. Robust performance on the top-line front is expected to be driven by 10% growth
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Market Outlook | India Research

in dispatches and higher realization. OPM is expected to increase by 113bp yoy to 20.5%. The companys bottom line is expected to grow by 48% yoy to `225cr. We maintain our Neutral view on the stock.

ACC 3QCY2011
ACC is expected to announce its 3QCY2011 results. The company is expected to post top-line growth of 40.1% yoy to `2,294cr. The strong performance on the top-line front is expected to be aided by both 16.1% growth in dispatches and higher realization. The substantial growth in dispatches is on account of capacity additions at Wadi and Chanda. Riding on improved realization, OPM is expected to expand by 543bp yoy to 18.9%. The companys bottom line is expected to grow by 137% yoy to `237cr. We maintain our Neutral view on the stock.

November 1, 2011

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Market Outlook | India Research

Quarterly Bloomberg Brokers Consensus Estimates

ACC Ltd. - Consolidated (01/11/2011)
Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit
Source: Bloomberg

Q3 CY11E 2,302 358 16 217

Q3 CY10 y-o-y (%) 1,759 218 12 86 151.4 30.8 64.7

Q2 CY11 q-o-q (%) 2,539 578 23 328 (33.9) (9.3) (38.1)

Ambuja Cement Ltd. (01/11/2011)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit
Source: Bloomberg

Q3 CY11E 1,845 343 19 203

Q3 CY10 y-o-y (%) 1,564 302 19 152 33.6 18.0 13.4

Q2 CY11 q-o-q (%) 2,173 598 28 348 (41.5) (15.1) (42.7)

Essar Oil Ltd. (01/11/2011)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit
Source: Bloomberg

Q2 FY12E 12,324 657 5 248

Q2 FY11 y-o-y (%) 10,909 497 5 130 13.0 32.3 90.6

Q1 FY12 q-o-q (%) 14,946 928 6 469 (47.2) (17.5) (29.2)

HPCL Ltd. (01/11/2011)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit
Source: Bloomberg

Q2 FY12E 41,929 (184) (0) (228)

Q2 FY11 y-o-y (%) 30,710 2,483 8 2,090 (110.9) 36.5 (107.4)

Q1 FY12 q-o-q (%) 40,798 (2,568) (6) (3,080) (92.6) 2.8 (92.9)

Punjab National Bank Ltd. (01/11/2011)

Particulars (` cr) Net profit
Source: Bloomberg

Q2 FY12E 1,148

Q2 FY11 y-o-y (%) 1,075 6.9

Q1 FY12 q-o-q (%) 1,105 3.9

SAIL - (03/11/2011)
Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit
Source: Bloomberg

Q2 FY12E 11,320 1,366 12 868

Q2 FY11 y-o-y (%) 10,603 1,695 16 1,090 (20.3) 6.8 (19.4)

Q1 FY12 q-o-q (%) 10,811 1,311 12 838 3.6 4.7 4.1

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Market Outlook | India Research

Ashok Leyland Ltd - (03/11/2011)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit
Source: Bloomberg

Q2 FY12E 3,040 323 11 142

Q2 FY11 y-o-y (%) 2,714 306 11 167 (15.1) 12.0 5.5

Q1 FY12 q-o-q (%) 2,496 245 10 86 64.5 21.8 32.1

Economic and Political News

Inflation to ease soon, says FM Infrastructure sector growth slows to 2.3% in September 2011 Fiscal deficit doubles to `2,92,458cr in 1HFY2012 FDI policy on equity relaxed, realty to gain DIPP amends foreign investment policy to allow smooth PE exits

Corporate News
RIL plans US$2.3bn investment in R-Series gas field Oil Ministry plans to counter CAGs D6 charges IVRCL to restructure business, focus less on realty segment IndusInd Bank hikes rates on savings a/c by 2% to 6% Tata Motors to challenge Singur land order today
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

Results Calendar
01/11/2011 02/11/2011 03/11/2011 04/11/2011 05/11/2011 07/11/2011 Punjab Natl. Bank, Ambuja Cements, ACC, HPCL, Essar Oil, Divi's Lab., Central Bank, Bajaj Electrical, Orchid Chemicals Allahabad Bank, Andhra Bank, Taj GVK SAIL, Sun TV Network, Ashok Leyland, Gujarat Gas, TVS Motor ONGC, Bharti Airtel, Nestle, GSK Pharma, GlaxoSmith Con, Marico, Nagarjuna Const. Motherson Sumi United Spirits, Madras Cements, Punj Lloyd

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Market Outlook | India Research

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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